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Bulk annuity specialist Pension Insurance Corporation has secured a £52m buy-in deal with the trustee of the Medway Packaging Pension scheme, covering 425 pensioners and 150 deferred members.
The scheme’s sponsor, Mondi Aberdeen Ltd, is a subsidiary of UK-listed packaging and paper manufacturer Mondi.
James Paterson, trustee chair of the Medway Packaging Pension Scheme, said: “Following a thorough evaluation of the options available to secure member benefits over the long term, we were satisfied that insuring the benefits with PIC was the best outcome for the scheme’s members.”
Consultancy Aon and law firm Eversheds Sutherland advised the trustee.
Dave Barratt, senior consultant in Aon’s Risk Settlement Group, said: “This transaction emphasises how smaller schemes can make better decisions and access competitive insurer pricing with attractive terms if they approach the market in the right way.”
Herbert Smith Freehills advised PIC.
The deal follows a larger transaction PIC had last week with the trustee of the EDS 1994 Pension Scheme. The £1.1bn buy-in covered 3,000 pensioners and 2,300 deferred pensioners.
The scheme’s sponsoring employer belongs to IT services company DXC Technology.
Ceyhun Cetin, vice president and treasurer of DXC Technology, said: “DXC has been highly focused on delivering for our colleagues and by strongly funding our plan we have put both our colleagues and DXC in a better place. This allows for conversion to a fully guaranteed insured solution for our colleagues while putting DXC on a stronger financial foundation.”
Meanwhile, Phoenix Group’s subsidiary Standard Life has concluded a £150m buy-in transaction with the Sappi UK Pension Scheme, covering the liabilities of 1,300 members.
Sappi is a pulp and paper company providing materials made from woodfibre-based renewable resources.
Mike Roberts of Pan Trustees, as trustee of the scheme, said the move “marks an important milestone in the scheme's journey plan”.
PwC acted as lead adviser for the transaction, with legal advice provided by Squire Patton Boggs, and administration and project support from Deloitte.
Jani Singh, lead transaction adviser at PwC, said: "To be able to execute the full scheme buy-in transaction in the current uncertain market conditions is a positive outcome... To achieve this, we took a solutions focused approach, which included efficiently disposing the scheme's illiquid assets. As schemes reach their endgame destination quicker than they anticipate, we expect features such as illiquid assets and capturing market volatility to become more common."
The transaction came a week after Standard Life announced a £680m buy-in deal with Whitbread Group Pension Fund.
As insurers compete in the pension risk transfer market, who do you think will be the largest player at the end of 2022?
