The Xylem UK Pension Plan, the pension fund for a water technology provider, has completed a bulk annuity transaction worth £255m (€294m) with Rothesay Life, the firm’s first transaction of 2020.
The deal covers all 2,500 plus members of the plan – 1,100 of which are deferred members – who accrued their pension benefits while employed within Xylem and previously related companies.
According to a release, the transaction is structured as a full scheme buy-in which is expected to move to buyout in future, at which point Rothesay Life will take full responsibility for paying members’ benefits going forward.
Brian Blackmore, chair of trustees at the fund, said: “The transaction is a key step in our de-risking of the plan and delivers a superb outcome for our members by providing greater security of their benefits.”
Tom Seecharan, business development at Rothesay Life, said the scheme had a “challenging but realistic price target and a preparedness to move quickly to exclusivity if this could be met.”
He said that Rothesay’s “robust approach to risk management and strong capital position gave the trustee confidence in our execution capability and in the future security of the members’ benefits.”
The scheme was advised by Aon and Freshfields Bruckhaus Deringer. Rothesay Life was advised by Gowling WLG, it said.
Rothesay said it is set to have a busy year ahead with new bulk annuity deals.
Findings from a recent survey conducted by Lane Clark and Peacock (LCP) indicate that 2020 will see continued demand for buy-ins and buyouts as more defined benefit (DB) pension schemes reach maturity and insurer appetite remains high.