Addy Loudiadis, chief executive of Rothesay Life, the subsidiary of Goldmans which will assume responsibility for the assets and liabilities, said the fund would remain invested in cash and money market instruments.
She said: “Over time we expect longevity to trade as an asset class. The reason for going through the hard work of taking on and administering pension schemes and looking after their members is ultimately to be able to manage longevity risk going forward. We expect to try to trade longevity risk through longevity swaps and reinsurance and other forms of synthetic risk transfer which will not affect members.”
The acquisition of the Rank pension scheme which has 19,000 members, is Goldman Sachs’ first major buyout of a UK pension scheme. The Rank Group expects to save £30m in pension payments over the next two years and should receive a cash payment of £20m arising from an anticipated scheme surplus.
The deal was structured by setting up a new pension scheme and fundraising a bulk annuity contract with Rothesay Life.
Mercer, which acted as lead consultant for the deal was also instrumental in brokering the sale last year of the pension scheme assets of Emap and P&O to Paternoster.
According to a recent report by Aon Consulting, the value of pension schemes sold in the fourth quarter of 2007 increased sharply to £1.86bn, more than double the value sold in the previous nine months.
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