Motor vehicle manufacturer Honda Group’s UK defined benefit (DB) pension scheme has sealed a buy-in worth approximately £800m with Legal & General (L&G).
The transaction secures the retirement benefits of more than 1,700 retirees and 3,000 deferred members, according to a press release from the insurer.
The deal’s structure included a combination of assets and cash to pay the premium, while part of the payment was deferred to allow the trustees to wind down illiquid assets over the next few years.
L&G also provided a price lock to the pension scheme’s assets during the transaction, which the insurer said helped ensure price certainty while the terms were finalised. L&G’s asset management business managed the bulk of the scheme’s investment portfolio.
How schemes are solving illiquid asset issues
In this article from May 2024, Pensions Expert looks at the different ways in which pension schemes and insurance companies are handling illiquid assets during bulk annuity deal negotiations. Read more
Ray Runza, chair of the trustee board, said: “The security of our members’ benefits has been our highest priority, so this transaction marks an outstanding outcome for all involved. The trustee board is delighted to see a successful outcome after a rigorous selection process across market insurers and months of dedicated preparation and effort by all advisers.”
Swapnil Katkar, UK financial services partner at EY, said: “This transaction demonstrated that executing a buy-in within a strict timeframe remains possible while still achieving attractive pricing and suitable contractual terms through a concerted effort.
“In addition to the standard due diligence, this transaction involved substantial and extensive review of insurers’ administrative and customer service capabilities, and we are confident that the completed deal will benefit both the savers and the UK markets.”
The trustees and sponsor were advised by EY, with Mercer, Hymans Robertson, XPS and Isio also contributing in advisory roles. Burges Salmon provided legal advice to the trustees, Sackers advised Honda, and CMS advised L&G.
L&G aims to write between £50bn and £65bn of UK bulk annuity business in the five-year period ending 2028.
