Rothesay Life is pleased to announce that it has entered into a £115 million bulk annuity transaction with the Western United Group Pension Scheme (the “Scheme”), the scheme for current and former employees of the Vestey Group, securing a portion of the liabilities associated with paying pensions to its members.
- The transaction involved an exchange of UK gilts for a bulk annuity insurance policy that provides close matching to the Trustees’ chosen portion of the Scheme’s liabilities
- Since the buy-in policy has been purchased as an investment by the Scheme, the administration and payment of members’ benefits are unaffected by this transaction
- This transaction is a good example of large pension schemes executing mid-market transactions (£100m to £500m) in order to insure a portion of their liabilities, an area in which Rothesay Life has a key focus
Rothesay Life wrote over £1 billion of new bulk annuity business in 2012 and reports a strong pipeline of opportunities, which are expected to produce a flow of new business in 2013 to underpin its appetite for larger, more bespoke transactions.
The Trustees of the Western United Group Pension Scheme were advised by Lane Clark and Peacock (“LCP”).
Addy Loudiadis, CEO, Rothesay Life, said: “This transaction illustrates the trend for defined benefit pension schemes to use their gilts to purchase bulk annuities. For such pension schemes, bulk annuity pricing remains attractive in relative terms because they have been less susceptible to the fall in interest rates than those schemes with a lower allocation to gilts. We are talking to a number of pension schemes about their intentions to follow this trend in 2013.”
Ben Fowler, Group Head of Reward for Vestey Group Ltd, said: “Our decision to enter into the buy-in policy with Rothesay Life is part of the Trustees’ and Company’s long term plan to secure our members’ benefits by investing in assets that match the Scheme’s liabilities. The buy-in executed with Rothesay Life has given us a secure, low risk asset into which we could switch from our relatively highly-valued UK gilts, picking up other protections
such as cover against longevity risk and pension increase risk for a portion of the Scheme’s liabilities.”
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