Marvin OnumonuAberdeen Group is set to take over as the sponsoring employer of the Stagecoach Group Pension Scheme, which has more than 22,000 members.
The scheme’s strong surplus will allow Aberdeen to manage the funding and £1.2bn of assets, with responsibility for the scheme’s future.
An immediate pension uplift of around 1.5% has been agreed for all members, with over £50m of the surplus allocated to these increases.
The deal will give members better ongoing protection against inflation through higher caps, an initial pension rise, and the chance for further increases if the scheme performs well in future.
Aberdeen will take a minority share of any surplus, with most of it set aside for members.
Aberdeen’s capital position is not expected to be affected.
This move will allow Stagecoach Group to step away from the large defined benefit scheme, aiming to simplify its business.
Aberdeen will use its pension investment solutions and private markets expertise to manage the assets, including infrastructure, private credit, and real estate.
The deal supports the UK Government’s efforts to invest pension assets more productively.
Jason Windsor, group CEO at Aberdeen, said: “This is a landmark agreement that will deliver significant value to Stagecoach’s scheme members, and to Aberdeen.
“The scheme’s strong funding position allows Aberdeen to take on the responsibility for managing the fund and provides the opportunity to enhance member benefits by investing in productive assets.
“The agreement, which aligns with the UK’s goal of making pension capital work harder for the economy, brings £1.2bn in new assets under management and opens up new investment opportunities.”
Windsor added: “We believe in the run-on model for well-funded schemes, having already taken this approach for our own scheme.”
John Hamilton, trustee chair for the Stagecoach Group Pension Scheme, said: “Our objective was to consider what would provide the best pension outcomes for the scheme members.
“With a significant starting surplus in the scheme built up over many years and prospects for further sustained growth in the fund, our goal was to run-on the pension scheme to provide better inflation protection and higher pensions for our members using the scheme assets under secure funding arrangements.
“The trustee had a natural meeting of minds with the team at Aberdeen.”
Hamilton added: “Their experience of achieving similar outcomes for their own scheme, a belief in the need for growth and productive assets, and the recognised strength of Aberdeen’s pensions and investment teams, all meant we were able to develop an innovative solution to deliver improved pension outcomes for our members.”
Bruce Dingwall, chief financial officer at Stagecoach Group, said: “We have been pleased to support the Trustee in assessing the best option for the scheme, having reached a strong funding position.
“We are delighted that these arrangements allow members to benefit from a strong sponsor and an expectation of further benefit improvements over time.
“For Stagecoach, this transaction gives us a clean break from the large defined benefit pension scheme, which supports our objective of simplifying our business.”
