The buy-in removes longevity, interest rate, and inflation risk for a proportion of the Scheme and is in line with the Group’s strategy of de-risking the pension liabilities. As a result of the transaction, the accounting pension surplus recorded on the Group’s balance sheet will reduce by an estimated £120m with no related cash impact.
LCP acted as lead adviser on the transaction. Legal advice was provided to the Scheme by Gowling WLG and to Scottish Widows by CMS.
Huw Evans of BESTrustees, Chairman of the Scheme, commented: “This buy-in improves the risk profile and investment efficiency of the Scheme for all members and represents a significant step towards securing the benefits promised. The Trustees are grateful to their advisers and to the Company and its advisers all of whom worked seamlessly together
David Stewart, partner in LCP’s de-risking practice and lead adviser, commented: “We were delighted to be appointed by the Trustee as a specialist de-risking adviser to complete one of the largest CPI-linked buy-ins to date. We established an ‘umbrella’ contract structure following the model we successfully developed for ICI, Pearson and M&S. This provides a quick and efficient platform to enable future buy-ins as attractive CPI-pricing becomes available.”
Matt Wilmington, Head of Bulk Annuity Origination at Scottish Widows, commented: “We are delighted that the Trustees have chosen Scottish Widows as a partner in their ongoing de-risking plan. Working collaboratively with LCP, Gowling WLG, CMS and the Trustees, the efficient process allowed us to complete the buy-in contract and asset transfer in less than four weeks of being selected as the Trustees' preferred provider.”
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