The Honda Group UK Pension Scheme has completed a £800m buy-in deal with Legal & General Assurance Society, securing the retirement benefits of over 1,700 retirees and over 3,000 deferred members.
The pension fund, sponsored by Honda Motor Europe, is a longstanding client of L&G Asset Management, and L&G was able to leverage its combined investment and insurance expertise for this transaction to craft a “bespoke package of solutions” for the scheme.
L&G provided a “price lock” direct to the scheme’s assets during the transaction, ensuring price certainty while the terms were finalised. This, according to L&G, reduces the scheme’s exposure to market volatility, allowing transactions to occur seamlessly across a range of market environments.
As part of the transaction, the pension fund paid a premium through a combination of an in-specie asset transfer and cash, with L&G also providing a partial, flexible deferred premium solution to support the run-off of the scheme’s illiquid asset holdings over the coming years.
This solution, it said, enables schemes to defer a significant proportion of a transaction’s total premium, providing greater optionality during a transaction process.
The pension fund trustees and the sponsor were jointly advised by EY, while the trustees were further advised by Mercer as investment advisor, Hymans Robertson as section 36 advisor, and XPS as the scheme actuary, while the sponsor was further advised by Isio as investment advisor.
Burges Salmon provided legal advice to the trustee, Sackers provided legal advice to the sponsor, and CMS provided legal advice to L&G.
Ray Runza, trustee chair, said the security of scheme members’ benefits has been the highest priority for trustees.
He said the transaction was “a successful outcome after a rigorous selection process across market insurers and months of dedicated preparation, and effort by all advisors”.
Andrew Kail, chief executive officer of institutional retirement at L&G, added: “This is another example of L&G’s ability to deliver for trustees, sponsors and members in all market environments.”
He added: “What really differentiates our proposition is our ability to offer schemes a multi-award-winning customer service offering as well as bespoke transaction structuring that caters to individual schemes’ practical needs.”
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