L&G completes second buy-in tranche with Rolls-Royce bringing total to £5.7bn

Legal & General has provided investment management services to the Rolls-Royce UK Pension Fund since 1989, giving it a long-standing role in managing the scheme’s assets alongside its more recent risk transfer mandates. That asset management relationship continued through the earlier £4.6bn transaction and has now been extended alongside the latest buy-in tranche.

In addition to the insured liabilities, Legal & General will continue to manage a large proportion of the Rolls-Royce UK Pension Fund’s remaining asset portfolio, which stands at £8.4bn following the earlier transaction. The retained assets provide ongoing investment management revenue for Legal & General alongside the premium flows from the pension risk transfer deals.

Legal & General’s work with Rolls-Royce builds on its previous £1.1bn buyout for the Vickers Group Pension Scheme in 2016, another transaction linked to the wider Rolls-Royce corporate group. That earlier buyout transferred responsibility for paying members’ benefits to Legal & General on a full buyout basis, compared with the buy-in structure used for the Rolls-Royce UK Pension Fund.

The bulk annuity and investment mandates with the Rolls-Royce UK Pension Fund sit within Legal & General Retirement Institutional, which is led by CEO Laura Mason. The division is responsible for originating and managing large pension risk transfer transactions and associated asset strategies for institutional clients.