Driving success for the Ricoh UK Products Pension Plan

Following the identification of a market opportunity, our teams worked in partnership with the trustees of a long-standing client of ours, Ricoh UK Products Pension Plan, to complete a full buy-in. The trustees entered into the buy-in transaction for ~£75m in Q1 2024.

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Our teams have provided services to the scheme trustees for over 16 years, including actuarial, administration, investment and, most recently, risk transfer. There was a strong, collaborative relationship with both the trustees and the sponsor supporting the scheme, which was being run for the longer-term. 

The scheme’s journey

End of 2022

The scheme was set up on our online funding tracker, Illuminate, meaning the funding level was being monitored regularly. At the end of 2022, due to significant market events, we identified that the estimated deficit on insurance company terms had reduced considerably and was in a zone that was expected to be attractive to the sponsor from an affordability perspective.

We provided training to the trustees and sponsor on bulk annuities, the transaction process, and investment matters. They agreed in principle that securing a bulk annuity was an opportunity they wished to explore. 

To ‘lock in’ the gains in funding, our investment team quickly provided the trustees with the investment advice required to move to a significantly lower risk investment strategy. The strategy was refined further in 2023 to reflect a more sophisticated match.  

Early 2023 

We supported the trustees with a selection process to choose suitable legal advisers to advise them throughout the project. We maintained the pace of the transaction by progressing workstreams around affordability, transaction objectives, and potential selection criteria for choosing an insurer. The trustees agreed the main areas of focus and how these would be assessed, and worked collaboratively with the sponsor to make sure all views were considered.

Following conversations with our actuarial team, the trustees and sponsor agreed to set up an escrow account to help manage the transaction journey and the deficit reduction contributions that were due.  

We also undertook a significant amount of data and benefits work at pace throughout 2023 to help prepare the scheme for approaching the insurer market. This included:

• preparation of a detailed benefit specification;
• data gap analysis;
• electronic address tracing;
• marital status tracing; and 
• contingent spouse pension calculations.

The overall quality of the scheme’s data after this work was excellent.

2023 and into 2024

Following a robust approach to market in mid-2023, competitive quotations were received from a number of insurers in October/November 2023. The feedback received was that the quality of the scheme’s data and the way in which the scheme was presented to the market meant they were keen to be involved and put their best proposals forward.  

We helped the trustees to assess the insurers’ quotations against the agreed transaction objectives and selection criteria and managed a transparent quotation process to allow the trustees to choose their preferred insurer (subject to due diligence checks). The clear process helped to manage expectations and resulted in a highly competitive process.

The trustees carried out due diligence on their preferred insurer, supported by our administration team assessing the insurer’s administration capabilities. Over the next two months, we worked closely with the trustees’ legal advisers, CMS Cameron McKenna Nabarro Olswang, to review the benefit specification and agree contractual terms, and the buy-in was completed at the end of January 2024. We project managed the entire process and chaired weekly update calls with the trustees, sponsor and CMS.

The outcome

The trustees of the Ricoh UK Products Pension Plan secured a full scheme bulk annuity purchase with Canada Life on terms that were highly attractive.  

Our administration team is currently working with Canada Life to embed new administration processes, ensuring a smooth transition for members. We are also continuing to support the trustees with post-transaction activities, such as Guaranteed Minimum Pension (GMP) equalisation.

 

"Working with Barnett Waddingham (BW), we completed a circa £75m full scheme buy-in, insuring the pension benefits of 538 members for Ricoh UK Products Ltd. Both the trustees and BW were organised and communicated with us throughout the whole process. As well as advising the trustees in relation to the proposed transaction, BW acted as scheme actuary, investment adviser and administrator for the plan and have worked with the trustees for many years. This made the process really smooth as they had a great understanding of the scheme. Chris Hawley, Partner at BW was easy to communicate with which enabled us to identify and resolve any challenges quickly and effectively."

 

Our client has expressed their gratitude for our support throughout the process:

 

"The BW team, including Ruth Thomas who has been scheme actuary to the Scheme for over 25 years, provided excellent joined up actuarial, investment, administration and risk transfer advice throughout the process, providing the trustees all the information required to make the appropriate decisions. We feel the advice provided by Chris Hawley and Fiona Wright based on their experience with the bulk annuity market was fundamental in the competitive quotes we received. BW impressed us with the project management provided and close working relationship with our chosen legal advisors, CMS, which ensured the project progressed to schedule."

"It was an absolute pleasure working with BW on this transaction. They were professional, efficient, and technically competent. They ensured the project maintained strong momentum and kept both the trustees and the sponsor fully advised at all times."

 

Key skills demonstrated

The key skills we demonstrated included:

Project management

We successfully managed a multi-stream complex project and exceeded our client's expectations on delivery. This included running a robust competitive quotation process resulting in a strong outcome for our client (and positive feedback from insurers). We also prepared the data and benefits whilst gaining traction in a busy bulk annuity marketplace. 

Overcoming challenges

We successfully navigated several challenges during the transaction, including some ‘alternative’ insurer submissions and specific contractual matters that required negotiation and the development of bespoke solutions. The investment transition proved challenging and we had to join up the underlying fund manager with the insurer as part of developing the solution.

Communication and collaboration

We provided a fully joined up service to the schemes trustees on a ‘one team’ basis – including building a close working relationship with CMS.

Smooth and quick delivery

The speed of the process exceeded the trustees’ expectations and was significantly faster than the scheme’s overall journey plan.

How we can help 

If you are interested in finding out more about how our experts can help you navigate your risk transfer journey and leverage market opportunities, please contact Chris Hawley or Fiona Wright.