The AIB Group UK Pension Scheme has announced the completion of a de-risking transaction worth £1.1bn (€1.3bn), covering more than 1,300 members.
The deal was completed by Legal & General Group and makes use of a new solution the insurer has developed and further tailored for the AIB Group scheme in partnership with advisors for the trustee and its sponsor, Allied Irish Banks, a statement disclosed.
The transaction is split between a £850m pensioner buy-in and a £250m assured payment policy (APP).
Legal & General already offered the pension fund an intermediated longevity insurance agreement covering its pensioner members, which has now been converted into a pensioner buy-in by using the insurer’s extensive restructuring expertise.
Furthermore, Legal & General said the APP provides the pension scheme with enhanced certainty of reaching full buy-in over a planned timeframe. It locks down investment risk by providing protection against changes in asset yields, interest rates and inflation.
The scheme’s asset management relationship with Legal & General Investment Management enabled a smooth asset transition. The fund was advised on the transaction by Mercer and Sackers. The bank was advised on the transaction by Mercer, PWC and CMS.
Norbert Bannon, chair of the fund’s trustees, said the transaction always had “the clear objective of improving the security of members’ benefits. This would not have been possible without the constructive input and advice of our advisors”.
Laura Mason, chief financial officer of Legal & General Retirement Institutional (LGRI), said: “We are pleased to have been able to help AIB Group UK Pension Scheme in the latest stage of its derisking journey and are proud to showcase our new assured payment policy solution.”