Rolls Royce has agreed a £4.6bn partial buy-in deal with Legal and General for its defined benefit pension scheme.
In an announcement today (June 6), the parties stated the deal was the largest bulk annuity transaction ever made in the UK market, surpassing L&G’s previous record of £4.4bn with British Airways.
The partial buyout with the Rolls-Royce UK Pension Fund covers the benefits of about 33,000 in-payment pensioners, and follows a previous deal made in 2016 – when L&G agreed a £1.1bn buyout of the 11,000 members of the Vickers Group pension scheme, which is part of the Rolls-Royce Group.
As a result of the transaction, Legal & General will be responsible for the administration and payments of the pensions to the relevant scheme members once the transaction moves to buyout.
L&G stated the deal also involved the transfer of a hedging portfolio and the restructuring of an existing longevity swap held by the pension scheme.
The provider has now transacted more than £6bn in global bulk annuity transactions in 2019 and has transacted four of the five largest UK bulk annuity deals, it added.
Laura Mason, chief executive of L&G Retirement Institutional, said: "Working collaboratively with the scheme and its advisers, we can provide the security of insurance, whilst also ensuring that the scheme members benefit from the quality customer service for which the L&G group is known.
"The scale of the transaction provides further opportunities for us to invest directly in the UK economy and make a positive difference in our towns and local communities."
Joel Griffin, head of global pensions and benefits at Rolls-Royce, said the company was "delighted to be able to offer greater stability and certainty for the members of the Rolls-Royce UK Pension Fund, by protecting the benefits of around 33,000 pensioners for the future through this transaction.
"This would not have been possible without the close collaboration and commitment of our trustees and advisers over many years, ensuring that the scheme is well-funded," he concluded.
maria.espadinha@ft.com
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