Telereal Pension Plan has completed a £130m (€153m) bulk purchase annuity (BPA) full scheme buy-in with Aviva.
As part of the transaction, Aviva will insure the defined benefit (DB) liabilities for around 500 members of the pension plan sponsored by Telereal Service – a commercial property investment, development and management company – removing the investment and longevity risk.
Carl Clissold, chair of trustees of the Telereal Pension Plan, said: “The trustees are delighted to have reached this significant milestone for the members and would like to thank all parties, including the plan’s sponsor, Telereal Services Limited, who have all collaborated in closing this transaction within a short timescale.”
He added that the trustees are preparing the scheme for buyout with a “smooth transition and the delivery of member benefits”.
Sean Rooney, BPA senior deal manager at Aviva, said the process was well managed and completed quickly, thanks to all parties collaborating to reach a successful outcome.
“We look forward to welcoming Telereal members as Aviva customers in due course,” he noted.
Joe Hathaway, associate partner at Aon, said that achieving attractive terms for the trustees was contingent on a quick execution and relied on all parties working “extremely hard” over just a few weeks.
Hathaway added that the transaction was a part of Aon’s Pathway service, which is specifically designed for small schemes. He said this was “vital” in allowing the parties to “move quickly”.
Aon’s Pathway service launched in 2014 and to date has transacted around £2bn in liabilities, with over 95% of transactions successfully completed.
This year, Aon said it already completed six deals, across five different insurers, with schemes of less than £150m and is currently advising transactions with more than 20 others of similar size.
Hathaway said: “The pension scheme risk settlement market is buoyant and, although there is some noise about small schemes being crowded out of the market by all the mega deals, this is not what we are seeing in practice.”
He pointed out there are increasingly more options and resources available for schemes that are under £150m in size. This includes the streamlined BPA service for small schemes from Aviva, and the ‘Mosaic’ service from Pension Insurance Corporation.
“This expansion in capacity across the industry is welcome as it is really needed to support the increasing level of demand across the full range of scheme sizes,” he said.
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