The pension trustees of UK supermarket Asda and its US owner Walmart have agreed a £3.8bn (€4.4bn) buy-in with insurer Rothesay Life.

The deal covers all members of the Asda Group Pension Scheme – 12,300 in total, with 4,800 pensioners and 7,500 deferred members.

Asda will make a one-off final payment into the scheme of some £800m, which is to be followed in due course by a full buyout, with completion expected in late 2020 or early 2021, according to a statement.

The transaction, made partly to exploit “favourable market conditions”, will remove all future scheme liabilities from the Asda and Walmart balance sheets.

Roger Burnley, chief executive, Asda, said: “We have supported the scheme over many decades through significant cash contributions.

“That funding, combined with strong stewardship by the scheme’s trustees, has resulted in the very positive situation where the scheme can now be transferred to an A+ rated insurance company, Rothesay Life, derisking the scheme and providing long term, sustainable support for its members.”

Aon was lead adviser to the pension scheme trustees, alongside Addleshaw Goddard, Cardano and Lincoln Pensions.

Mike Edwards, partner at Aon, confirmed to IPE that this was the Asda scheme’s first bulk annuity deal, adding that there was a trend emerging for large schemes to cover all their pension liabilities in a single transaction.

He drew attention to the “immaturity” of the Asda scheme given that two-thirds of the members are deferred, noting that such long duration has “created pricing challenges” in the past. 

The buy-in is the latest in a string of derisking transactions for Rothesay, following recent deals with National Grid, Pernod Ricard and Telent. It is also the UK’s 10th longevity transaction over £1bn so far this year. Nearly £35bn of pension liabilities have been insured via bulk annuities this year.