The Co-operative Pension Scheme has completed a £4bn buy-in secured by Rothersay with Aon as a lead broker.

The transaction secures benefits of almost 50,000 members, including 17,655 pensioners and dependants as well as 31,896 deferred members.

No contribution was required from the sponsoring employer as the scheme is in surplus and illiquid assets held in the scheme’s investment portfolio were used to pay the premium, it was announced.

The transaction is the final step to securing member benefits as part of a long-term plan to de-risk the scheme. In 2020, the scheme completed three buy-in deals including two with Pension Insurance Corporation (PIC), one for a £1bn transaction in February 2020 and a £400m deal in April 2020, with a further £350m buy-in with Aviva in May 2020.

Rothesay has been working collaboratively with the scheme and its advisers for 18 months to structure this transaction, and has now completed over £5bn of pension de-risking for the Co-op pension scheme following 2022’s buy-in with the Bank Section.

The lead broker on the transaction was Aon. Rothesay and the scheme received legal advice from Gowlings and Linklaters, respectively. Addleshaw Goddard provided the company with legal advice, while Mercer acted as scheme actuary and the trustees’ investment adviser.

Chris Martin, professional trustee at IGG and chair of trustees, said that through a “collaborative approach and our advisers’ commitment to our objectives, plus Rothesay’s flexibility and partnership” the scheme was able to navigate a significant period of volatility.

Martin said: “I am pleased that by working together, we were able to achieve, an extremely successful outcome for our members. I would like in particular to thank my colleagues on the trustee board and within Co-op Group and our excellent advisers.”

Gary Dewin, people director for pensions for the Co-op, said: “The Co-op is supportive of the de-risking action taken by the trustee which we see as a positive outcome for scheme members.”

Dewin added that the transaction reduces Co-op’s exposure to future funding risks associated with its defined benefit liabilities which he said helps the Co-op strengthen the company for the benefit of its members.

Sammy Cooper-Smith, head of business development at Rothesay, pointed out that economic conditions continue to contribute to a very busy bulk annuity market, resulting in a number of exciting opportunities as more schemes than ever pursue insurance solutions.

He added that one of the impacts of scheme funding levels improving so quickly is the increased number of clients coming to market with a greater exposure to illiquid assets.

He noted that “Rothesay’s illiquid asset transition team is purpose-built to support these schemes in their de-risking journey.”

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