The Aga Pension Saga: Foundations for our Concrete Proposals for Growth

The Aga Rangemaster pension scheme (formerly Glynwed) required considerable attention.  It was a key factor behind the sale to Middleby and it inspired an innovative structure to pre programme actuarial valuations and asset allocations. 

We described it at the time as “a deal nobody liked, but everybody could live with”.  It worked well.  Now, with my colleague Roger Higgins (ex KPMG and BTPS) as Chair, it is fully funded with a long term, cautious investment plan.  The key distinction from most schemes is it has never required big cash contributions.  Something of a triumph for all involved.  A summary of the  "Aga Pension Saga" is below.  

I have spent an extraordinary amount of time in recent years pointing out to the pension industry that their journey plans to buyout are ridiculously expensive and usually going the wrong way from member and sponsor perspectives.  In the last two years - as more have realised that a loss on assets does not disappear because it has been sprinkled with LDI holy water - public policy has shifted.  Finding new and better Credible Alternatives to bulk transfers has become a regulatory requirement.  The Government has also called for Concrete Proposals for growth.  Indeed, Aga’s experience provides a readymix plan.

William McGrath

The Aga Saga

In 2015 a Framework Agreement set asset allocation and actuarial assumptions for multi valuations.  Group guarantees were provided.
 
Aga Rangemaster numbers of note (focus on actuarial valuation years).

Assets in 2014	£867m
Assets in 2023	£790m
Pension payments (2015 - 2023)	£432m
Contributions (2015 - 2023)	£52m

Year	Liabilities £m	(Deficit) / Surplus £m
2014	936	(69)
2017	1167	(233)
2020	1248	(326)
2023	760	30

Agreed asset allocations throughout:

• Return seeking                           40%
• Matching assets (inc. property)  60%

 
2023 valuations showed a surplus.  No company contributions are expected from 2025.  Scheme / company can agree to move to a reduced discount rate with a long-term asset return at a premium to it and raised hedging levels.
 
Without the Framework Agreement, more “derisking” measures would have been required and far higher sponsor cash contributions.  Standard recovery plans would have run at over £30m a year.  The numbers show they would have been unnecessary.