Abrdn has unveiled plans to use the substantial surplus from its defined benefit (DB) pension scheme to fund the cost of providing defined contribution (DC) benefits to its current employees. In addition, the company confirmed its decision to revert to the Aberdeen Group brand.
The company’s annual results revealed that it has reached a significant agreement with the trustee of its primary DB pension plan to release the surplus for the benefit of both the company and its DB members. This arrangement is one of the largest of its kind, allowing Abrdn to finance its DC contributions from the DB surplus, while largely preserving the surplus and ensuring continued flexibility for future strategies, including a potential insurance buyout.
As part of this agreement, DB members will see enhanced pension benefits, along with safeguards to ensure the ongoing financial stability of the plan. The changes are projected to generate an annual benefit of approximately £35 million in net capital generation, starting from July 2025.
The agreement also includes a modest increase to the target investment return, enabling access to a broader array of investment opportunities, including both private and public market assets.
The decision to unlock the surplus comes after strong long-term investment performance from Abrdn Investments, driven by the company’s pension solutions and liability-aware investment teams. Abrdn was advised by Slaughter and May, Pinsent Masons, Willis Towers Watson, and PwC, while the trustee was guided by Shepherd and Wedderburn, Hymans Robertson, and Isio.
Jason Windsor, CEO of Aberdeen Group, commented on the development, stating, “We’re thrilled to have unlocked the significant value within our DB pension plan’s surplus. The strong performance from Abrdn Investments has not only provided the necessary resources to fund DC contributions for the foreseeable future but also allows us to continue enhancing the pensions of DB members.”
Christopher Wheeler, professional trustee and trustee chair at BESTrustees, also expressed satisfaction with the arrangement: “This collaborative effort between the trustee and the company has delivered strong, mutually beneficial outcomes. DB members will enjoy enhanced pension entitlements while benefiting from the security of an exceptionally well-funded scheme.”
In addition to the pension plan adjustments, Abrdn confirmed that it will change its name to Aberdeen Group. However, the company emphasized that this rebrand would not affect its subsidiary legal entity names or the names of its underlying funds.
Windsor concluded, “This name change marks a new chapter for the organisation as we look ahead with confidence, focusing on delivering for our customers, employees, and shareholders.”
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