The Countrywide Farmers Retirement Benefits Scheme has agreed a £100m (€109m) bulk annuity deal, confirming the grounds on which it exited the assessment period for the UK’s defined benefit lifeboat fund last year.
The transaction, with Legal & General Assurance Society, secures the benefits of 360 deferred members and 712 retirees.
The pension scheme entered the Pension Protection Fund (PPF) assessment in March 2018 after the insolvency of its sponsor, a rural retailer, livestock feed and energy supplier. It exited the PPF assessment in November 2019 after being deemed to be overfunded on a PPF measure.
The next step was for the pension scheme to come to market and get quotes from insurers, with the deal announced today, known as a “PPF+” transaction, being the outcome of that process.
“In this scenario the trustee had a pot of money to secure benefits greater than PPF levels of compensation, and they wanted to secure benefits that were as high as possible,” said Rachel Cutts, origination and execution director for Legal & General Retirement Institutional.
“The benefits that can be secured in cases like these are fully dependent on the insurer’s pricing, so it’s very different to a typical transaction where the insurer is providing a price for a given set of benefits,” she added. “It’s more involved and it requires collaboration between all parties.”
Hetal Kotecha, director at professional trustee firm Independent Trustee Services, said the scheme it had secured benefits for members that were “far higher than we could have hoped for when we started out on this journey”.
Legal & General said the transaction was structured in a way that provided the flexibility for additional benefits to be secured in the future, as the trustee expected to receive additional recoveries from the ongoing insolvency proceedings.
Richard Mills, partner at LCP, which advised the trustee on the transaction, said the transaction was structured in a way that wold allow the trustee to top up members’ benefits when further recoveries were received during the ongoing insolvency proceedings.
“The policy gives the Trustee significant flexibility if the insolvency proceedings take time to resolve,” he said.
Looking for IPE’s latest magazine? Read the digital edition here.