19,000 Member Pension Scheme Sold

Pensions Scheme Sold

06/03/2008

The sale to new insurance company Rothesay of a pension scheme with 19,000 members and £700m worth of assets by gambling group Rank is the biggest such sale seen in the UK.

The scheme has been transferred to a subsidiary of US investment bank Goldman Sachs as the Rank business has reduced, and the company has found itself in a position where the scheme's assets are now bigger than the market value of its sponsor.

De-risking a company balance sheet via a scheme sale can make good business sense. Rank are expected to save approximately £30m in contributions and receive a £20m payment from the scheme.

Nigel Bolton from law firm Irwin Mitchell's Pension team said: “Businesses thinking about selling their schemes to remove pensions risk from the balance sheet need to think carefully about funding issues as not all sales will result in a return of surplus monies from the scheme.

"In some cases sales could require extra payments to be made by the company to make it worthwhile for an insurance company to take the scheme."