Leading business and financial adviser Grant Thornton UK LLP has helped the disability charity Scope remove risks from its pension scheme and reduce its expected costs, with a pensioner buy-in exercise worth £40 million.
The charity’s defined benefit pension scheme recently insured around £40 million of current pensioner liabilities with a bulk annuity provider. The transaction was at very competitive pricing, meaning there was no additional cost above the scheme’s technical provisions and represented a large saving on the expected cost of funding the liabilities using the scheme’s current gilt and index linked gilt portfolio. This provided the opportunity to remove risk for the scheme trustees and members, whilst simultaneously reducing the expected cost for the charity.
Kevin Hollister and Ian Line from Grant Thornton, who advised the trustees on the transaction, commented: “Many charities face large risks and volatility within their legacy defined benefit pension schemes that can be a major concern to the trustee board of the charity. When opportunities emerge to reduce these risks without increasing expected future funding costs, they should position themselves so they are able to act quickly as both the scheme trustees and Scope have done in this situation.”