ICI Pension Fund completed a £70m (€76m) buy-in with Legal & General Assurance Society in May, its 17th such de-risking deal.
With £10.3bn in assets and more than 85% of its membership comprising pensioners, the pension fund is one of the largest and most mature defined benefit schemes in the UK.
The buy-in in May was its ninth with Legal & General, with whom it established an innovative umbrella contract in 2014 in connection with a then record-breaking package of liability insurance.
“This latest transaction demonstrates the value of [that] contract […] and highlights what can be achieved by trustees with thorough preparation, the right experienced advisors and a clear decision making framework,” said Heath Mottram, CEO, ICI Pension Fund.
The pension fund has insured some £8.2bn of liabilities through buy-in transactions since 2014. It has struck five such deals with Scottish Widows, and three with Prudential. In addition to the bulk annuity policies, it also has a £2bn liability-driven investment portfolio managed by BlackRock.
According to its most recent annual report, in March last year it made the decision to liquidate all its return-seeking assets, the allocation to which had by then been reduced to 3% of total fund assets. As as at the end of March this year it only had £45m of such investments left, representing 0.4% of assets.
Aon has estimated that £12.7bn of risk transfer deals were placed in the first half of this year, noting that this used to be the typical market size for the whole year before the strong growth in the market in 2018-2019, fuelled mainly by some large full scheme buyouts.
2020, in contrast, has so far been dominated by pensioner transactions, it noted.
Yesterday a £930m buy-in for Littlewoods pension scheme with Rothesay Life was announced. ICI Pension Fund is the pension fund for the former Imperial Chemicals Industries, taken over by Akzo Nobel in 2008.
The trustee was advised on the transaction by LCP and Allen & Overy.