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£675m bulk annuity deal with Lehman Brothers Pension Scheme


 6 May 2015

Transaction highlights:

  • Rothesay Life assumes pension liabilities for all defined benefit pension scheme members of the Lehman Brothers Pension Scheme (“the Scheme”), including pensioners in payment and deferred members
  • Full member benefits have been secured with financial support from Lehman Brothers International (Europe) (in Administration) (“LBIE”)
  • Benefits that have been restricted are now set to be paid in full
  • The terms of the bulk annuity include a facility for full risk transfer

PwC, as adviser to LBIE, led the transaction which is the largest bulk annuity deal announced to date in 2015. Under the terms of the bulk annuity policy, Rothesay Life will assume liability for the full benefits payable to all Scheme members who have defined benefit entitlements. LBIE provided financial support to facilitate the transaction, reflecting the settlement agreement between the Scheme Trustees and LBIE’s Joint Administrators announced in August 2014.

The pension payments will be made via the Scheme initially, and in due course Rothesay Life will take over responsibility for paying benefits to members directly when the bulk annuity converts to a full buy-out.

Since the insolvency of Lehman Brothers in 2008, the Scheme has been subject to an “assessment period” under the Pensions Act 2004. As a result, the benefits payable to current pensioners have had to be restricted.  When the assessment period ends in July 2015, these restrictions will be lifted and benefits will be paid in full (including back-payments).

PwC led the process with the Trustees and their advisers to ensure the transaction was secured promptly following a rigorous competitive tender exercise.  Travers Smith advised the Trustees throughout, including in relation to the negotiations with Rothesay Life who were advised by Wragge Lawrence Graham & Co. Aon Hewitt also advised the Trustees.

Peter Gamester, Chairman of Trustees of the Lehman Brothers Pension Scheme, said: “Since the bankruptcy of Lehman Brothers in 2008, the Trustees have been striving to secure the pension benefits promised to members of the Scheme. The agreement with Rothesay Life achieves this goal as it enables members’ defined benefit entitlements to be paid in full. On behalf of the Trustees, I would like to thank the Trustees’ advisers together with LBIE and their advisers and Rothesay Life for their support and assistance in achieving this extremely successful outcome.”

Rothesay Life Chairman, Keith Satchell, said:  “Our previous experience of full buy-outs meant we were well-placed to help LBIE and the Trustees secure full member benefits. Since Rothesay was established it has provided insurance for six of the top ten full buy-outs, underlining our position as a leader in the buy-out market. This is our sixth such transaction in under twelve months and we expect this trend to continue throughout 2015 as companies look to settle pension liabilities in full while pricing conditions remain favourable. Our pipeline of quote requests clearly reflects the shift towards full buy-outs from partial, pensioner-only transactions.”

Paul Kitson, partner and risk transaction team leader at PwC, said: “We are delighted to have advised LBIE in securing members’ benefits in full for this landmark transaction.  Certainty of cost was an important objective for LBIE and the use of technology throughout the process was integral to that objective being met. We used Skyval, PwC's pensions analytics software, to obtain accurate insurer pricing and then to track these prices through a period of volatile market conditions, all the way through to the efficient completion of the bulk annuity at competitive pricing.  This real-time analysis was also the basis for a very successful asset hedging strategy meaning that the deal stayed firmly on track during a period when falls in interest rates impacted buy-out affordability for most UK pension schemes.”

The Travers Smith team for the bulk annuity transaction was led by pensions partner Susie Daykin who said: “The insolvency of Lehman Brothers left the Scheme with a significant funding deficit.  The ultimate goal for the Trustees has been to secure all members' benefits. That has now been achieved.  It is an excellent outcome for the Scheme and its members.”


For further information from PwC please contact:

David Jetuah, Media Relations, PwC 020 7212 1812/

Claire Truscott, Media Relations, PwC  020 7213 3688/

For further information from Rothesay Life please contact

Temple Bar Advisory Limited     020 7002 1080

Alex Child-Villiers or William Barker

For further information from Travers Smith LLP, please contact

Sasha Radoja, Senior Communications Manager: 020 7295 3228 /


Notes to editors
  1. AV Lomas, SA Pearson, PD Copley, R Downs and JG Parr were appointed as Joint Administrators of Lehman Brothers International (Europe) to manage its affairs, business and property as agents without personal liability. AV Lomas, SA Pearson, PD Copley, R Downs and JG Parr are licensed in the United Kingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales.
  2. Skyval is a real-time web-based pensions platform which sponsors, trustees and their advisers can use as a common and confidential tool for their valuation, analytics and benchmarking requirements. Skyval has its functionality on one single system, so once it is set up for one purpose it is available for other uses (eg actuarial valuations, risk management, accounting disclosures, asset-liability modelling, benchmarking and Skyval Insure). For more information please visit
  3. Find PwC’s August 2014 release, detailing financial support to the scheme, here:

About Lehman Brothers Pension Scheme

The Lehman Brothers Pension Scheme provides pension benefits for ex-employees of Lehman Brothers and predecessor companies.

About Rothesay Life

Rothesay Life was established in 2007 and has become one of the leading providers of regulated insurance solutions in the UK market for pensions de-risking, making payments of around £700m a year from over £16 billion of insurance contracts. In 2014, Rothesay Life received around £1.7 billion of bulk annuity premiums (2013: £1.6bn) and wrote seven deals over £100m, more than any other insurer in the sector. This strong growth has been achieved through the steady accumulation of pension scheme clients and significant strategic acquisitions.
Rothesay Life is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

About PwC

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at

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About Travers Smith

Travers Smith is an award-winning law firm.  Its focus is corporate work but it also has leading practices in commercial, competition, dispute resolution, employee incentives, employment, environment & operational regulatory, finance, financial services, investment funds, pensions, real estate, restructuring and tax. Travers Smith advises the trustees, sponsors and providers of a wide range of pension schemes. Travers Smith's clients include the trustees of some of the UK's largest pension funds.