The trustee of biochemical and food company pension scheme CSM Limited completed a £86m (€102m) full buy-in at the end of 2021 covering deferred members representing around 80% of scheme liabilities.
The deal was done with Just Group, which said it was one of several “deferred heavy” transactions it completed last year, demonstrating its ability to deliver such deals both in small and medium sizes.
The trustee and sponsor worked tighter in a joint working group, conducting a feasibility study during 2020 to establish a strategy to secure members’ benefits and then receiving pricing from multiple insurers in three weeks using the PwC Insure service.
Preparation for a bulk annuity included the trustee hedging the scheme assets to protect against volatile markets, in part caused by the spread of the coronavirus Omicron variant. This provided greater certainty for the sponsor about the contribution required.
A marital “write-out” exercise was also completed, and an electronic trace was conducted for members that did not respond to establish the presence or otherwise of spouses so insurers could provide accurate quotes.
“Through a clear strategy and collaborative approach with the company through the joint working group, advised by PwC UK, we have managed to secure the buy-in much earlier and at a much lower cost than expected,” said Becky Wood, trustee director at 20-20 Trustees and trustee of the scheme.
“We’re now working closely with the team at Just to complete the data cleanse so we can move to issuing individual policies in the future.”
Jani Singh, lead transaction adviser at PwC UK, said the firm was able to secure competitive pricing and terms from Just, which highlighted the increased buy-out competition in the market.
“With six insurers now actively quoting on deals including deferred members, and improved funding levels, schemes are much closer to achieving buy-out than they may think,” he added.
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