Legal & General insures Â£129m of Unileverâ€™s â€œSection 615â€ pension liabilities.
21 October 2014
Legal & General Group Plc (“Legal & General”) has agreed a bulk annuity arrangement with the Trustees of the Uniac Pension Fund (“the Fund”) to insure £129 million of the Fund’s liabilities through a buy-in policy held as an investment of the Fund.
The buy-in policy matches the pension obligation with its proceeds paid to the Trustees. It will not mean any changes from a member perspective but will mean significantly lower levels of investment and funding volatility for the Fund. As a standalone transaction it will not have any implications for other Unilever pension funds.
LCP was the lead advisor on the buy-in, and legal advice was provided by Linklaters.
Unilever is one of the world's most successful consumer goods companies with listings on the London and Amsterdam Stock Exchanges. Unilever established the Fund in the UK in accordance with Section 615 of the Income and Corporation Taxes Act 1988 to provide superannuation benefits to its employees whilst seconded outside of, generally, the UK. Unilever sponsors a number of pension arrangements across the world, each distinct from the Uniac Fund, including the £7 billion Unilever UK Pension Fund. This transaction is only relevant to the Uniac Pension Fund and will not impact on any other pension fund sponsored by Unilever.
This transaction is the largest buy-in to date for a Section 615 pension plan.
Lyn Williams, Chairman of Trustees of the Uniac Pension Fund, said: “We believe this is a good deal given the particular circumstances of the Uniac Pension Fund. The Uniac Pension Fund is a mature pension scheme and this transaction is a central part of our strategy to simplify the scheme and align a significant portion of our assets and liabilities. Working closely with Unilever, LCP and Linklaters, we are delighted to have concluded this transaction on favourable terms.”
Clive Wellsteed, Partner at LCP, and lead adviser on the transaction said: “Section 615 pension plans operate under different governing legislation to most Defined Benefit ( DB) schemes and have some additional features, including the ability for new dependants to fully commute their pension for cash. This innovative buy-in provides comprehensive coverage of these features and offers excellent value for money to Unilever and the Trustees.”
Tom Ground Head of Bulk Annuities and Longevity insurance at Legal & General said: “We are delighted to have been chosen by the Trustees of the Uniac Pension Fund on this innovative buy-in. This further enhances Legal & General’s reputation as the de-risking provider of choice for the UK’s largest companies.”
Notes to editors
LCP is a firm of financial, actuarial and business consultants, specialising in the areas of pensions, investment, insurance and business analytics.
Clients include 3i, Barnardo’s, Hilton Worldwide, Lenovo, NM Rothschild & Sons, Smith & Nephew, Tate & Lyle, UNISON, Volkswagen and Whitbread.
The firm has more than 500 staff based at locations in London, Winchester, Brussels, Utrecht, Dublin and Abu Dhabi. Visit www.lcp.uk.com for further information.
About LCP’s buy-in and buy-out practice
LCP has led the way in helping pension schemes to de-risk using buy-ins and buy-outs. So far in 2014, LCP has acted as lead adviser to the ICI Pension Fund on its buy-in transactions with Legal & General (£3bn) and Prudential (£600m), to the Church Workers Pension Fund on its £100 million buy-in with Prudential, to the Total UK Pension Fund on its £1.6bn buy-in with Pension Insurance Corporation, to Philips on its £300m buy-in with Prudential and the largest medically underwritten transaction written to date (£36.5m) for a shipping firm.
Gill Hoyle, LCP 020 7432 6679 firstname.lastname@example.org
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