The Marks & Spencer Pension Scheme has completed a third set of buy-in transactions, purchasing two further policies with Aviva and Phoenix for a total of £750m (€821m).
According to Hymans Robertson, which has been working with the retailer on the de-risking strategy for the €11.8bn pension scheme, 80% of the scheme’s pensioner liabilities are now insured through a series of deals totalling broadly £3.7bn.
This takes into account buy-in policies purchased in 2018 and 2019.
Phoenix, for example, has now done three transactions with the pension scheme, securing a total of £1.3bn of liabilities; the newest bulk purchase annuity was for £360m.
It said the trustees approached the market earlier in the year as market volatility presented a favourable pricing opportunity. Both of the new transactions were carried out under so-called “umbrella contracts” entered into in 2018.
Graham Oakley, chair of Marks and Spencer Pension Trust, said: “We’re pleased to announce the purchase of these additional buy-in policies, providing another important contribution to our ongoing objective of reducing risk in the scheme to increase the security of all members’ pensions.
“The collaborative approach and our existing relationships have allowed us to act quickly and complete further well-priced transactions.”
Richard Wellard, partner at Hymans Robertson, said the new batch of deals was “further evidence of the benefits of the steps undertaken in recent years to establish shared objectives and a collaborative approach to working”.
The process to select insurers and negotiate terms was led by Lane Clark & Peacock, with Linklaters advising the trustee on legal matters.
Myles Pink, Partner at LCP, said: “The M&S Pension Scheme has been able to take a further step to remove longevity and other risks, building on the thorough preparatory work carried out for its previous buy-in transactions.
“The scheme has again demonstrated how well-prepared pension schemes that are flexible in their approach and have umbrella terms in place can efficiently lock into market opportunities when they arise.”
BHS senior manager scheme to avoid lifeboat fund
The pension scheme for senior managers of collapsed retailer BHS has agreed a £2.5m bulk annuity transaction with Legal & General, enabling it to exit the Pension Protection Fund (PPF) assessment period.
The pension scheme entered the assessment period the company went into administration in April 2016. The deal with Legal & General secures benefits in excess of those payable from the PPF.
Chris Martin, chair of the trustee at Independent Trustee Services, said the positive outcome was made possible by “proactive trusteeship in managing the assets, monitoring the funding level and taking advantage of attractive pricing in the bulk annuity market”.
“Despite its small size, the transaction was particularly innovative, and I would like to thank Legal & General for their support.”
Barnett Waddingham, Eversheds Sutherland and Willis Towers Watson advised the trustee.
Last month the Old British Steel Pension Scheme announced agreeing a £2bn insurance buy-in that will also keep it out of the PPF.