M&G completes £286m Northern Bank BPA deal
The transaction is the second with M&G's insurance subsidiary Prudential since it returned to the BPA market.
M&G has completed a £286m bulk purchase annuity (BPA) transaction for 1,917 members of the Northern Bank Pension Scheme. The insuring entity was the Prudential Assurance Company Limited (Prudential) M&G’s wholly-owned subsidiary offering life and pensions solutions.
The transaction was referenced in M&G’s half year results last week and is the pension scheme’s second with the Prudential following a previous pensioner-only buy-in completed in 2015. It is the final step to insuring the scheme’s membership in full and also involved the successful transfer of an illiquid asset from the pension scheme.
M&G re-enters the BPA market
Last week M&G announced it was re-entering the BPA market with a £331m buy-in transaction of the M&G Group Pension Scheme (M&GGPS), one of the group’s own pension schemes, as well as a £286m bulk annuity transaction for an external scheme.
The buy-in was insured through M&G's wholly owned life and pensions subsidiary Prudential.
M&G said it had also completed a £286m bulk annuity (BPA) transaction for an external scheme. The whole scheme buy-in for the M&GGPS secured the benefits of 1,414 pensioner and deferred members.
De-risking 'milestone'
Andrea Rossi, chief executive, M&G said: “We are very pleased to have worked with the trustee of the Northern Bank Pension Scheme to achieve this significant de-risking milestone. The transaction demonstrates our ability to find flexible and innovative solutions for our clients.
“It also represents an important step in the delivery of our strategic objectives by leveraging our differentiated business model to drive sustainable growth.”
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M&G’s re-entry into the bulk purchase annuity market takes the number of UK providers to nine, with others expected to follow by the end of the year.
This week M&G announced two defined benefit (DB) pension scheme transactions. The move marked its re-entry to the bulk annuity purchase market.
Nick Chadha, partner at PAN Trustees and chair of trustee, Northern Bank Pension Scheme said: “The Trustee is pleased to have partnered with M&G again to enhance the security of members’ benefits and mitigate most of the risks facing the Scheme. We are delighted to have achieved a full buy-in several years ahead of expectations, demonstrating the importance of trustees having a good understanding of the de-risking markets and being agile in their approach.”
Shelly Beard, managing director, WTW said: “It was a pleasure to work with the trustee, Bank, M&G and the wider advisory team to achieve this significant transaction for the Scheme. This was a complex transaction in which all parties collaborated to find solutions, which included unusual benefit features and the transfer of an illiquid asset.”
The Trustee was advised on the transaction by WTW as risk settlement adviser, Hymans Robertson as investment consultants, WTW as scheme actuary and scheme secretary, and Sackers and Burges Salmon as legal advisers. CMS provided legal advice to Northern Bank Limited. Hogan Lovells provided legal advice to M&G.