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British Bankers’ Association: A £95m buy-in in the height of Covid-19

Case studies

In April 2020, the Trustee of the British Bankers’ Association (BBA) Pension Scheme completed a £95m full buy-in with Aviva. LCP is adviser to the sponsor, British Bankers’ Association, and was appointed to the Trustee to run the process through LCP’s streamlined buy-in and buy-out service.

The background

The BBA Scheme spent several years preparing. This included work clarifying areas of the Scheme’s benefits and aligning the investment strategy with insurer pricing. Law Debenture was appointed as sole trustee to the Scheme in 2018 to help streamline governance. The BBA Board decided to proceed with a full buy in during summer 2019. Based on indicative market pricing provided by LCP, the Board raised funds for the transaction from its members which were placed
in escrow. This helped the Scheme demonstrate to the insurers that a transaction would happen if they put a price forward that met the sponsor’s metrics (increasing insurer engagement at a time when they were being very selective).

It was agreed to adopt LCP’s streamlined buy-in and buy-out service to further increase insurer engagement and ensure a no-nonsense transaction process.

Our solution

Three insurers were shortlisted to provide full quotations for taking on the Scheme and, after further negotiation, the Trustee entered exclusivity with Aviva at the start of March 2020 putting in place a price-lock.

March proved to be one of the most challenging periods of market volatility on record. Despite these significant challenges, the transaction was signed in early April 2020 on the same terms and with only a short delay.

The results

Bringing the transaction to a successful conclusion required:

  • the Trustee and sponsor being able move quickly once their transaction criteria were met, through a streamlined governance process and working with pre-negotiated contracts under LCP’s streamlined service.
  • a collaborative approach between LCP, the Scheme’s other advisers and Aviva to ensure all risks were identified and managed appropriately.
  • clear and straightforward advice to enable decisions to be taken quickly and decisively. LCP’s experience helped the trustee to navigate difficult market conditions and make clear, well-informed decisions in the interests of members.

LCP’s experience helped the trustee to navigate difficult market conditions and make clear, well-informed decisions in the interests of members.

The LCP streamlined service gave me confidence that we are
using a robust, tried and tested process to obtain a high-quality
insurance policy that will protect the pension payments to our
members. We are really pleased with the result especially in such
challenging market conditions

Sean Burnard Director of Law Debenture and the Sole Corporate Trustee of the BBA Scheme

How we can help

We are market leaders at each stage of de-risking, including planning, investment strategy, transactional services and wind up.

Finding certainty in uncertain times

Finding certainty in uncertain times

Pensions de-risking report

How resilient has the buy-in, buy-out and longevity swap market been to Covid-19, and what opportunities are available to pension plans looking to insure their pension liabilities?

Download the report