The Aviva Staff Pension Scheme (ASPS) has agreed a £1.7bn (€2bn) buy-in with its own sponsor company, Aviva Life & Pensions UK.
The deal covers 5,800 members of the defined benefit (DB) scheme – 1,500 pensioners and 4,300 deferred members. There are 50,000 members in total.
The buy-in is the scheme’s first bulk annuity deal, and in a statement, the company said it was the scheme’s “strong financial position” that had led the trustee to complete the transaction as part of a long-term plan to de-risk the scheme.
However, ASPS has previously completed a longevity swap, a £5bn deal effective in early 2014. It transferred the longevity risk for 19,000 scheme members to three reinsurers: Swiss Re, Munich Re and SCOR Global Life. At the time it was the biggest-ever pension scheme longevity swap on a global basis.
Brian Bussell, chair of the trustee of ASPS, said: “The trustee is delighted to have entered into this first buy-in to help secure the benefits due to our members, working closely with our advisers and Aviva to do so. Combined with the existing longevity swap, this buy-in means that the scheme has now hedged a material amount of longevity and investment risk.”
The scheme trustee was independently advised by Hymans Robertson, Linklaters and Redington.
Michael Abramson, partner, Hymans Robertson, said: “Despite political uncertainty and market volatility, 2019 has already proven a record year for the bulk annuity market, with total transaction volumes in excess of £36bn. Buy-ins such as these show how insurance can be a meaningful part of the de-risking strategy for even the largest pension funds.”
Earlier this week the supermarket chain Asda announced a £3.8bn buy-in with insurer Rothesay Life for the Asda Group Pension Scheme.