Pension Risk Transfer and Complex LDI Transition Management

This client case study details the execution of a €1.3 billion pension buyout involving significant cleared swap exposure. The objective was to complete the buyout while market conditions remained favorable, facing challenges such as time sensitivity and the complexity of transitioning over €4 billion in notional exposure across cleared interest rate and inflation swaps. Russell Investments was engaged to manage the transition process, which included establishing new custody accounts, coordinating with multiple managers, and overseeing interim portfolio management until regulatory approvals were finalized. The solution involved comprehensive pre-trade planning, specialized cleared-swap transition management, active market risk management, and interim portfolio oversight. Execution was completed in just two days, significantly faster than the estimated two weeks, and at a lower cost than projected. The successful execution of the buyout not only achieved the client's strategic objective but also strengthened the relationship between the client and Russell Investments, positioning them for future engagements.