Aberdeen Group plc, an investment manager overseeing more than £200 billion in assets for pension, insurance, and other institutional clients, has agreed to become the sponsoring employer for the Stagecoach Group Pension Scheme (SGPS).
The SGPS, which enjoys a strong funding surplus, will continue under a “run-on” model. This ensures long-term financial security, enhances inflation protection, and provides an initial pension uplift of approximately 1.5% for all members—equivalent to an immediate allocation of over £50 million from the scheme’s surplus. By allowing investments in productive assets, the arrangement also opens the door to potential future increases for members.
Aberdeen will take on the scheme’s funding obligations and manage its £1.2 billion in assets. While Aberdeen will receive a minority share of any distributed surplus, the majority will remain with scheme members, with strict safeguards in place to protect the scheme’s financial health. The robust funding position means this commitment has no material effect on Aberdeen’s capital.
For members, the deal brings better protection against inflation through higher caps, the 1.5% initial uplift, and the possibility of further increases tied to the scheme’s performance. The agreement also strengthens Aberdeen’s investment platform by leveraging its expertise in private markets, infrastructure, real estate, and private credit, aligning with broader UK policy goals to deploy pension assets more productively.
Jason Windsor, CEO of Aberdeen Group, 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. 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 SGPS, added: “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. 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, Stagecoach Group CFO, concluded: “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.”
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