UK - Two of GlaxoSmithKline's pension plans have offloaded some of their annuity risk by entering into bulk annuity contracts with Prudential.

The contracts have an aggregate value of approximately £900m, covering around 15% of GSK's UK defined benefit pensioner liabilities.

Under the terms of the agreement, Prudential will take on responsibility for a portion of the pensioner benefits payable by the trustees of the GSK Pension Scheme and the GSK Pension Fund.

GSK will continue to administer the scheme and fund, and the terms of the pension payments made to its scheme members will remain unchanged.

In a statement, GSK said: "These policies will provide an income to the trustees of the pension plans to meet pensions in payment. They provide security to the trustees and reduce risk in the pension plans.

"GSK pensioners continue to be members of the GSK pension plans and will see no change in how their pensions are provided."

GSK's pension schemes had a £2.26bn deficit at the end of June this year, an increase of £500m from end 2009, despite the company's making top-up contributions of more than £1bn since the start of 2008.

Andrew Crossley, Prudential UK and Europe deputy chief executive, said: "Prudential has a unique set of capabilities in the annuities market, including extensive longevity experience, a superior investment track record and operational scale.

"Our strategy for bulk annuities is to participate selectively in the market and only enter into transactions that meet our strict requirements for return on capital.

"This agreement demonstrates our ability to complete complex and innovative transactions within the bulk annuity market."