The Littlewoods pensions scheme has completed an £880m buy-in with Scottish Widows.
The pensioner buy-in policy passes the risks associated with 60 per cent of the liabilities in the scheme to Scottish Widows and improves its funding position.
This provides a monthly income to the trustees to meet the pensions payable to nearly 7,000 members of the scheme.
Colin Thwaite, chairman of scheme's trustees, said: "We are delighted to have completed this buy-in transaction with Scottish Widows, covering well over half of our liabilities. The attractive pricing of the transaction has closed the gap to being fully funded and further reduces the risk profile of our investments to meet members’ pensions."
The scheme's strong funding position has been attributed to its early move to hedge its interest rate and inflation exposures and the trustees hope the price negotiated with Scottish Widows will improve its funding position further and reduce the downside risks it faces.
Derek Harding, finance director of the scheme's sponsor Shop Direct, said: "The trustees have managed the investment strategy very successfully and the scheme remains in a healthy surplus on a prudent self-sufficiency basis, making it one of the best funded defined benefit schemes in the country."
The buy-in is Scottish Widows’ largest bulk annuity transaction to date.
Emma Watkins, bulk annuity director at Scottish Widows, said: "We are proud to have been chosen by the trustee for this significant buy-in. Scottish Widows, the trustee and their advisers have worked closely together to ensure the buy-in was implemented smoothly."
