Metal Box Pension Scheme has signed a £2.2bn (€2.6bn) buy-in with the Pensions Insurance Corporation (PIC) with the intention that this will move to a full buyout next month.

The deal is the largest bulk annuity transaction of 2021, guaranteeing the benefits of the scheme’s 10,300 pensioners and 2,200 non-pensioner members.

“We are delighted to have reached this position of securing our members’ benefits in full following a thorough selection process,” said Gary Fishlock, chair of the trustees. “This has been the culmination of a successful journey over many years, supported by the company.”

Sidonie Lécluse, senior vice president at Crown Packaging European Division, said the company was pleased to have enabled the trustee to fully secure members’ benefits at an earlier point than they had expected.

Mercer, an adviser to the company, said the deal “marks the end of a truly strategic journey that has lasted 11 years”.

In 2010 the Metal Box Pension Scheme had a solvency deficit of around £700m and a recovery plan that extended almost 30 years, according to Mercer, which structured and led the transaction alongside fellow company adviser Sackers.

In an overview, the consultancy mentioned some key steps along the journey to the all risks buyout with PIC, including phased pension increase exchange exercises and enhanced transfer value exercises, separation of the defined contribution assets into a master trust (Aon), and implementation of Guaranteed Minimum Pension (GMP) equalisation using the conversion method.

According to Mercer, completion of the GMP conversion helped agree the one-month period to full buyout from buy-in. The consultancy also noted that the transaction with PIC was carefully structured “to deal with a rump of illiquid assets”.

Ben Stone, risk transfer partner at Mercer, said the key to the transaction was “extensive planning and significant preparation work, coupled with the company and trustee setting clear objectives from the outset.

“Taking this approach with insurers, while supported by the trustee advisers, enabled a very smooth transaction to complete with no surprises.”

Mitul Magudia, head of business development at PIC, said the insurer expected the £2.2bn deal to “form a blueprint for others looking to achieve similar objectives in the future and are of course delighted to have written the biggest transaction of this year so far”.

The trustee was advised by Willis Towers Watson, Mayer Brown and Lincoln. PIC was advised by Herbert Smith Freehills. The Metal Box Pension Scheme was closed to future benefit build-up on 31 March 2019.

The scheme’s sponsor is Crown Packaging Manufacturing UK Limited, a subsidiary of NYSE-listed Crown Holdings Inc.

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