UK - BBA Aviation is in talks with Legal & General regarding a "de-risking" strategy, which would see the £478m (€612m) scheme exchange approximately two-thirds of its assets for a bulk annuity.
Unlike traditional pension fund buyouts, the ownership of the scheme would remain with BBA and the scheme trustees, along with all the liabilities, although L&G would be taking on the longevity risk by providing the annuity.
Although BBA declined to comment, it is understood the scheme, which has an actuarial valuation surplus of £65.6m on the UK income and protection plan, has been considering for some time how to better actively manage the scheme and to de-risk it where possible.
It is understood the deal, which is not expected to conclude for several weeks, will see the "extremely mature" scheme pay L&G around two-thirds of its assets - mainly in bonds - for the annuity which will allow BBA to keep the scheme under its control, rather than passing both assets and liabilities to an insurance company.
A similar deal took place in January when P&O the shipping company transferred £800m of bonds to Paternoster in return for a bulk annuity covering its existing pensioners but which allowed trustees to retain control of its £1.2bn scheme. (See earlier IPE.com story: Paternoster closes largest buyout yet)
These latest developments follow a number of recent pension buyouts in the first few months of 2008, including the first deals for new entrants Rothesay Life, a subsidiary of Goldman Sachs, and Lucida. (See earlier IPE.com stories: Rothesay Life completes first deal with Rank buyout; Lucida signs its first pensions buyout)
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email email@example.com