Legal & General secures a buy in arrangement incorporating a deferred premium facility with the RetailLink Management Limited Pension Plan.
14 May 2014
Legal & General today announces a buy-in arrangement secured in April 2014 with the RetailLink Management Limited Pension Plan, (“the Plan”) covering £35m of its liabilities. The arrangement incorporates a deferred premium facility which allows the Plan’s Trustees to fully insure benefits for the members of the Plan’s Defined Benefits section immediately, with payment of a proportion of the full premium to be made over the next 4 years.
The contract covers the liabilities for in aggregate nearly 100 deferred and current pensioners of the Plan. As well as the deferred premium facility, the de-risking insurance arrangement also incorporates a flexible approach to managing the need to address future GMP equalisation requirements, as well as utilising a facility designed by Legal & General Investment Management, which enabled the Plan to accelerate the transfer of risk to Legal & General.
The RetailLink de-risking arrangement is the second scheme to use Legal & General’s innovative deferred premium facility. The first was the transaction secured with Legal & General for the Kenwood Pension Scheme in 2013.
Tom Ground, Head of Bulk Annuities & Longevity Insurance, for Legal & General’s Retirement business said: "We are delighted to have worked with all parties to design and implement this innovative de-risking insurance arrangement. The arrangement allows the Trustees to fully insure the identified Plan liabilities from day one yet also provides the flexibility to spread part of the insurance premium, which helps to achieve greater certainty over future contribution requirements for the Plan’s employer.
We are seeing interest in our deferred premium facility growing, as trustees and companies are becoming aware of how this solution can help them to achieve de-risking outcomes that they previously thought were out of reach. The solution is available for both large and small schemes and we expect this to become a common transaction structure in future.”
The Trustees were advised by Mercer and their legal adviser was Travers Smith.
Simon Townsend, Trustee of the Plan, commented: "The Trustees are pleased to have been able to arrange the long term security of benefits for the Plan's members by entering into this bulk annuity arrangement with Legal & General. They have proceeded with this programme of risk reduction with the full support of Enterprise Inns Plc and obtained its commitment to meet the deferred premium instalments payable over the next four years. At that point, the Trustees will then be able to arrange for Legal & General to issue individual annuity policies to members".
Neil Rogers, bulk annuity consultant at Mercer and adviser to the Trustees, commented: “We were pleased to conduct a competitive tender process on behalf of the Trustees, enabling them to enter into a transaction structure with Legal & General that removes the Plan’s investment and mortality risk several years earlier than would otherwise have been possible. In so doing, it will provide security to members and at a known cost to the Plan’s sponsor, Enterprise Inns plc. Mercer is seeing increasing interest in this type of transaction structure, which we view as an important area of growth in the bulk annuity arena.”
Legal & General is a leader in the de-risking insurance solutions market recognised for the experience that has been gained over the past 27 years and from arranging over 3,250 bulk annuity policies.
Corporates, trustees or advisers looking for further information on the pension scheme insurance de-risking solutions available from Legal & General should call the Bulk Annuity and Longevity Insurance team on 020 3124 2994.
Notes to editors
Details of the Kenwood Pensions deferred payment facility is available via the following link: http://www.legalandgeneralgroup.com/media-centre/press-releases/2013/group-news-release-1180.html
Background on Legal & General
Legal & General is one of the UK's leading financial services companies and one of the UK's top 50 companies in the FTSE 100 Index. Legal & General has been an active participant in the insurance solution pension de-risking market for over 25 years and was voted Risk Reduction Provider of the Year at the 2014 and 2013 UK Pensions Awards and Risk Management Provider of the Year at the Pensions Age Awards 2014.
Legal & General provides annuities to over 750,000 current pensioners and over 170,000 deferred pensioners and also completed a number of landmark transactions. These include the recent £3.0bn bulk annuity arrangement with the ICI Pension Fund, the largest bulk annuity policy arranged by a pension scheme in the UK to date, and the £3.2bn longevity insurance transaction with the BAE Systems 2000 Pension Plan.
Legal & General offers a range of de-risking solutions, which includes buyout, buy-in, longevity insurance and liability-driven investment (LDI), to pension schemes of all sizes. Legal & General is also able to tailor a combination of LDI and longevity insurance to provide “DIY buy-in” solutions. Legal & General has expertise in investment management, all aspects of defined benefit provision as well as an in-depth understanding of mortality trends and longevity risk. The excellent services we are able to provide also include payroll, administration and communications.
The information contained in this release is intended solely for journalists and should not be used by consumers to make financial decisions.
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