Gallaher Pension Scheme agrees £1.7bn buy-in, IMI derisks further

Tobacco company secures £1.7bn buy-in

The Gallaher Pension Scheme has completed a £1.7bn buy-in with Standard Life, covering all 7,600 scheme members. The transaction for the scheme, sponsored by Japan Tobacco International, was agreed in December. Robert Thomas, trustee director at Law Debenture and chair of the trustee of the scheme, said he was delighted with the deal, adding that Standard Life “was selected following a period of thorough preparation and a robust competitive tender process”. The assets underlying the contract will be used to continue Standard Life’s investment into UK infrastructure and socially responsible projects. During the transaction, the trustees were advised by Aon and Hogan Lovells, while DLA Piper advised Standard Life. John Baines, partner at Aon, said: “Securing all benefits in a single transaction with significant benefits for all stakeholders of the scheme has been a monumental achievement. By preparing thoroughly in advance, including asset derisking over a number of years and a carefully structured transaction process, the trustee benefited from a fiercely competitive auction process.”

This article originally appeared on MandateWire.com

Engineering company completes £250m buy-in

The £563m IMI 2014 Deferred Fund has completed a £250m bulk annuity transaction with Pension Insurance Corporation, covering the liabilities of around 1,200 pension scheme members, 95 per cent of which are deferred members. The transaction takes the total liabilities sponsored by IMI and insured by PIC to £800m. Since 2016, the engineering company has signed five partial buy-ins with the insurer. Duncan Brown, group pensions manager at IMI and secretary to the trustee of the fund, commented: “This transaction is huge step in the direction of our long-term derisking objective of fully insuring our pension obligations. We have now insured close to 80 per cent of our UK defined benefit pension obligations over the past decade, securing the benefits for our members and substantially eliminating uncertainty around costs and cash for IMI plc as corporate sponsor of these obligations.” IMI plc and the scheme were advised by PwC, acting as lead transaction adviser, while the fund was further advised by Willis Towers Watson as the actuarial advisers and Aon as investment adviser.

This article originally appeared on MandateWire.com

Derisking transactions expected to hit £65bn in 2022

This year is set to be the biggest on record for pension scheme derisking, with £65bn of bulk annuity and longevity swap transactions anticipated to complete, according to Willis Towers Watson’s annual derisking report. Buy-ins and buyouts will make up £40bn of the anticipated total, while longevity swaps are expected to complete the remaining £25bn. Sadie Scaife, senior director in WTW’s transactions team, said: “The £40bn of buy-ins and buyouts we’re anticipating are likely to be from repeat deals as well as new pension schemes coming to market. We are also expecting the gradual trend towards full buyouts to continue, as schemes mature and funding levels improve, but also as [Pension Protection Fund]+ cases complete transactions. In these busy market conditions, we expect insurers and reinsurers to become more selective about which opportunities they will commit resources to, with schemes needing to be flexible on timescales if they want to maximise competition.”