UK - Legal & General Group has agreed to provide the future pension payments of 4,500 existing pensioners of the Weir Group Pension & Retirement Savings Scheme, in a deal worth almost £250m (€351m).

Under the agreement with the Weir Group pension trustees, around £240m of the bond portfolio from the group's main pension scheme will transfer to L&G who will then take on the pension liabilities from early next year.

The scheme is currently valued at £550m overall but an increase in the surplus during 2007, followed by the Weir Group's scheduled contribution of around £5m, made it possible for the transaction to take place.

That said, while L&G will take on the liabilities for 4,500 existing pensioners, the Weir Group confirmed it will continue to provide the future benefits of the 5,200 members in the scheme who are still to retire.

A spokeswoman for Weir said:  "We believe this is an excellent arrangement as the group's UK pension scheme will now have the added security of a specialist regulated insurance company.  In addition, there is continuing support from the company through scheduled annual payments to the Scheme."

Simon Gadd, managing director of annuities at L&G, said the deal represented part of a growing trend over the last 12 months as companies start looking at how to mitigate some of the risks associated with their scheme.

He added: "Companies such as Weir Group can start that process by buying an insurance policy in the name of the trustees to ensure they are able to pay their existing pensioners in the future."

L&G revealed it has already been in several similar deals in the past and said the process of mitigating all the risk associated with that part of the scheme can be seen as the first step towards matching all of its liabilities with insurance policies and eventually winding up the scheme and handing it over to the insurance company.

Gadd added: "Previously we have respected the privacy of the firm around these types of wins, but as pensions become a more important and sensitive issue for companies,  going forward we would expect to more often agree with companies to make these types of announcements."

The agreement follows an announcement from DP World, owners of P&O Shipping, last week revealing it had offloaded part of its pension scheme to Paternoster for around £800m.

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