Rentokil announces £1.5bn buyout with PIC

The agreement to insure the Rentokil Initial 2015 Pension Scheme covers 14,200 members, split between 7,500 pensioners and 6,700 deferred members.

While PIC confirmed that the contract to buy out liabilities has been signed by all parties, the transaction will begin life as a buy-in of the scheme's entire liabilities.

That means the scheme's pension obligations will stay on Rentokil's balance sheet, albeit fully funded and hedged, until issues around data and other tweaks are rectified. The contract is expected to convert into a full buyout in 2020.

While many other companies will have to continue investing heavily into their pension schemes for years to come, we can focus our future investments on delivering profitable growth

Andy Ransom, Rentokil Initial

Consultancy Aon advised on the deal, alongside legal firm Linklaters. The scheme's investment adviser was Willis Towers Watson.

Andy Ransom, Rentokil's chief executive, thanked the trustees for "excellent stewardship" and outlined the positive impact he hoped the transaction would have on the business.

"We have supported the scheme over many decades and over that period made significant cash contributions to remedy a deficit that has existed between the scheme’s assets and liabilities," he said. “While many other companies will have to continue investing heavily into their pension schemes for years to come, we can focus our future investments on delivering profitable growth.”

Chris Pearce, chairman of the trustee, called the agreement "great news for members" and said it would "continue the excellent pensions our members enjoy".

In November, consultancy Hymans Robertson announced that buyouts and buy-ins in the UK were set to pass £20bn for 2018, an increase of more than 50 per cent on the previous record in 2014.

Every independent trustee surveyed by the company said they expected volumes to beat this record again in 2019.