Rolls-Royce Holdings' UK Pension Fund reaches a landmark agreement with Pension Insurance Corporation, securing benefits for 36,000 members in the largest UK risk transfer of the year.

Rolls-Royce Holdings has announced a significant milestone as the trustee of its UK Pension Fund has finalized an agreement to transfer £4.3 billion ($5.8 billion) in bulk annuity insurance to a specialized insurer, marking the largest risk transfer in the United Kingdom this year.

The transaction with Pension Insurance Corporation (PIC), renowned for managing defined benefit pension schemes, encompasses all of Rolls-Royce’s remaining obligations to its employees. This includes pensions for 36,000 individuals, among them 15,000 retirees and 21,000 deferred members. Both companies celebrated this achievement in a formal statement.

Key Partnership Secured

A major consideration for the Trustee was selecting an insurance partner committed to providing high-quality customer care and support-fundamental elements of their management strategy.

This arrangement with PIC guarantees that all fund benefits are insured, offering certainty and security to members by one of Britain's most reputable insurers known for excellence in customer service.

Liz Airey, Chair of Trustees at Rolls-Royce Pension Fund, remarked: “This is a groundbreaking deal that offers increased security and peace of mind for our scheme members. We have found an excellent partner in PIC who will uphold our standards of superior member service.”

This move aligns with Rolls-Royce's strategic initiative to streamline its operations amidst booming demand for its engines. Burdened by pension liabilities over recent years, this transaction helps ease financial pressures as Chief Executive Officer Tufan Erginbilgic works toward organizational simplification.

Helen McCabe, CFO at Rolls-Royce, added: “Our stakeholders benefit immensely from this development. It's rewarding to ensure our promises are fulfilled concerning employee pensions while advancing towards simplifying our business model."

The deal pertains specifically to the last defined benefit pension scheme supported by Rolls-Royce within the UK context. The buy-in process involves asset transfers offsetting liabilities via insurance agreements-a precursor step towards complete scheme buy-out anticipated later on.

In July this year,PIC came under ownership by Athora Holding Limited following acquisition proceedings totaling approximately £5.7 billion ($7.67 billion). Athora stands out as a prominent pan-European entity specializing in savings alongside retirement services with assets exceeding €76 billion ($88.6 billion).

Mitul Magudia,CChief Origination Officer at PIC expressed satisfaction:“Collaborating on such an innovative project alongside Trustees & advisers proved immensely gratifying.The focus remained consistent-who could best maintain exceptional customer care standards? Our selection reaffirms commitment & readiness post-Athora acquisition towards pioneering numerous similar ventures henceforth.”


The entirety of this transaction utilizes current pension plan assets directly affecting Group net assets decreasing them roughly by £0.6 billion ($807 million). Full liability transfers including management transitions are expected within twelve months following completion whereby PIC assumes sole responsibility delivering insured member benefits subsequently.”