Scheme completes landmark full buy-in, two years ahead of schedule

Professional trustee company Entrust Pension Limited, part of Gateley Plc, has completed a landmark circa £70m buy-in with Aviva, as trustee of Federated Flexiplan No.1, an industry-wide non-associated multi-employer (NAME) scheme. The transaction will eventually secure the benefits of around 2,500 members employed by over 200 charities across the country.

The buy-in team was led by founding Entrust Director Patrick Kennedy and supported by fellow Director Suresh Bhatt, KPMG advisers Andrew Goddard and Adam Davis led on actuarial and buy-out matters respectively and Nick Johnson managing director of Aviva’s bulk purchase annuity practice led the Aviva team.

Entrust director and co-chair of the NAMES industry lobby group, Suresh Bhatt, commented: “Securing a full scheme buy-in on a NAME scheme represents a major if not unique achievement in the DB pensions sector. By working as a team with Employers and advisers we achieved our shared objective two years earlier than expected which is clearly a fantastic result.”

Patrick Kennedy emphasised Entrust’s confidence in choosing Aviva, commenting: “Whilst the process of taking the scheme to market was complex, Aviva made the decision easy. Our visit to their administration hub in Norwich quickly justified our decision to choose them. By showcasing the quality of their personnel and their use of innovative administration systems we felt assured that our members are getting a great deal. Our employers can now concentrate on funding hospices, medical research and housing and education projects in the knowledge that their hard working employees’ pension benefits are secure.”

KPMG UK’s Adam Davis, lead strategic adviser to the trustee added: “The KPMG team of insurance and pension experts spotted an opportunity to both enhance members’ benefits and cut the cost of buyout by 20% accelerating this process by ensuring the scheme’s benefits were efficient to insure.”

He further praised Aviva’s “flexible approach to dealing with the scheme’s particular requirements, including use of a price locking mechanism to reduce volatility prior to securing terms.”

Andrew Goddard, KPMG UK Partner and Scheme Actuary to the Plan said: “This is a great example of how a team led by a sole professional trustee and supported by one multi-faceted advisor team can get the job done in the most efficient way. The governance and monitoring structure that we put in place meant that we were ready to react to market opportunities and decisions were made quickly when they needed to be. I think any schemes that are serious about going on a buy-out journey could benefit from this platform solution approach.”

Nick Johnson, Managing Director of Aviva’s Bulk Purchase Annuity practice, commented: “We’re delighted to have been chosen as the BPA provider for the buy-in of this scheme.

This was a complex transaction with many moving parts and challenges to overcome. It clearly demonstrates the value of having experienced independent trustees and advisers, a well-designed and executed process and what can be achieved when all parties work closely together to achieve the same goal”.

As a trustee of the scheme, Entrust will remain responsible for the running of the scheme for the next 12 months whilst it is fully transferred over to Aviva.