Afternoon:
14°c
Royal & Sun Alliance (RSA) has outsourced the running of £1.9 billion of pension funds to Goldman Sachs in one of the biggest deals of its kind.
The insurance scheme is aimed at reducing the risk and cost to RSA of its pensioners living longer than expected.
Goldman Sachs will manage the funds by investing them in a range of gilts and other bonds.
In return, the investment bank promises to meet the ongoing monthly liabilities that the fund faces.
If Goldman is able to make higher returns from the assets than is needed to pay the pensions, it gets to keep the extra as profit.
RSA, which has 22,000 staff and many more former employees who have now retired, has moved aggressively in recent years to “de-risk” its pension liabilities.
It has shut its final salary scheme to new members and moved funds strongly out of equities and into bonds.
The £1.9 billion represents around a third of its total pension funds.
Chief executive Andy Haste says the move will improve the strength of the company balance sheet.
“We are pleased to have worked with the trustees to deliver a strong solution which takes advantage of market conditions,” Haste said.
All big companies are worried about pension liabilities. Barclays and supermarket group
Wm Morrison are among those that have recently shut final salary schemes.
