Hitachi UK Pension Scheme has agreed a £275m (€300m) buy-in transaction, a deal that covers the deferred members and retirees that were not insured with its first buy-in transaction in 2018.
The new transaction was with Legal & General, with the trustees again advised by Aon. The 2018 deal, for which the size is understood not to have been disclosed, was with Scottish Widows.
“This transaction completes the Hitachi UK Pension Scheme’s phased buy-in journey in just under three years – substantially ahead of the original target of 10 years,” said Michael Walker, principal consultant at Aon.
He said the acceleration had been possible due to strong asset performance, favourable insurance pricing, good preparation and “nimble” decision-making by both the trustee and the companies.
Jo Myerson, chair of the trustee from professional trustee firm Ross Trustees, suggested “effective decision-making achieved as a sole corporate trustee” played an important role in the deal.
The transaction price was locked to the assets of the scheme, which Legal & General said gave the trustee a high degree of transaction certainty while enabling it to harness favourable pricing conditions and market capacity.
“We are pleased to have established this relationship with the Hitachi trustees and helped them secure their members’ long-term financial security,” said Gavin Smith, pricing and execution director, UK pension risk transfer at Legal & General Retirement Institutional.
“This buy-in, in particular, demonstrates our ability to insure pension schemes with a high proportion of deferred members, showing that pensions de-risking isn’t just the preserve of mature pension schemes.”
The trustee obtained legal advice from Pinsent Masons while Macfarlanes provided legal advice to Legal & General. A spokesperson for the insurer said the £275m deal was completed in the second half of this year.