The pension scheme for UK company De La Rue, which designs and produces banknotes, has completed its first buy-in deal worth £320m (€374m) with Scottish Widows.
The deal covers the liabilities for approximately 1,400 pensioner members, it was announced.
Mike Roberts, partner at PAN Trustees and professional trustee chair of the scheme, said: “This buy-in is a major step in the scheme’s de-risking strategy and significantly improves the security of all members’ benefits.
He added that the scheme “valued Scottish Widows’ willingness to work in partnership with us to meet our objectives for the project”.
Hymans Robertson was the lead transaction adviser and the trustees also received advice from CMS, while the plan sponsor received legal advice from PwC and Slaughter and May. Scottish Widows was advised by Pinsent Masons.
Richard Wellard, partner at Hymans, said: “We worked closely with the trustee to clearly define their de-risking strategy and identify an opportune time to approach the bulk annuity market. The result was a highly competitive broking process, with Scottish Widows presenting a compelling and tailored proposition.”
Separately, Hymans Robertson has confirmed that total pension scheme buy-in and buy-out volumes totalled £27.7bn in 2021 as it published its Half Year Risk Transfer Report this morning.
James Mullins, head of risk transfer at Hymans Robertson, noted that the impact of the pandemic continued to influence markets in early 2021, however increased innovation in the longevity hedging space led to a busy second half of the year with total transactions at the second highest ever level for a six-month period.
With many of the insurers having been behind target by mid-2021, this created particularly strong competition toward the second half of the year, he said.
“The rapid growth in demand for pension schemes to insure their risks, along with improved pension scheme funding levels, attractive insurer pricing and new alternative risk transfer options, means that we expect around £50bn a year of buy-ins and buy-outs on average over the next 10 years, in addition to longevity swaps,” he predicted.
“That means that, by the end of 2031, £1trn of pension scheme liabilities will have been insured, covering 5 million members’ benefits,” he added.