UK - BBA Pension Trustees has completed a £270m (€343m) partial buyout deal with Legal & General to insure the benefits of almost 6,000 pensioners.

Under the terms of the deal, approximately 60% of the scheme's assets, £270m, have been transferred to L&G in return for regular annuity payments to insure the fund's pensions in payment.

The annuity purchase will insure the benefits of 5,900 existing pensioners, although BBA confirmed it has also agreed terms for L&G to insure the liabilities for scheme members who will retire in the next two years.

Andrew Wood, group finance director at BBA Aviation, said the decision to buy-out existing pensioner liabilities marks "an important step forward" for the BBA pension scheme.

"Current and future pensioners will see no change in the amount of benefit they receive or the way in which it is paid. But by swapping assets in the scheme for an annuity provided by L&G, we can de-risk the scheme and so provide greater stability and certainty in funding for the benefit of all members."

Simon Gadd, managing director of L&G's annuities business, said the deal reflects the current growing interest by trustees of schemes of all sizes in mitigating the risks in running their pension scheme.

"The phased transfer of the risks over a period of time is proving a particularly popular approach, as it allows trustees to continue to run the scheme, while a risk mitigation programme is implemented," he added.

The £478m BBA pension scheme, which was advised on the buy-out deal by Hewitt, Hymans Robertson and Hammonds, was first revealed to be in talks with L&G in March over a "de-risking" strategy that would still leave the pension scheme under the control of BBA. (See earlier IPE story: BBA in talks with L&G over 'de-risking' solution)

The latest deal follows a marked increase in buyout activity during the first part of 2008, as Paternoster completed a similar deal with P&O in a deal valued at £800m, while Rothesay Life and Lucida, two recent entrants to the market, also completed their first deals.

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