TT Electronics signs £400m buy-in
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The TT Group (1993) Pension Scheme has bought a bulk annuity contract securing the benefits of circa 5,000 retirees and deferred members for £400m.
TT Electronics plc is a global provider of advanced electronic technologies in aerospace and defence, healthcare and automation and electrification markets.
The deal was struck with Legal & General, which said that it was to link its price to the scheme’s existing assets to give the trustees certainty over price while the terms were being agreed. This also allowed the trustees to move swiftly when market conditions were favourable, having prepared the scheme for an insurance transaction for some years.
Thanking the scheme sponsor, advisers and fellow trustees, trustee chair Paul Felbeck said: “The trustee is delighted to complete the purchase of a buy-in contract for the benefit of scheme members with Legal & General, a highly reputable insurance partner known for its close attention to customer service and its financial strength.”
TT’s chief financial officer Mark Hoad called the transaction, which fully derisks the scheme, “an excellent outcome for our defined benefit pension scheme members, TT and our shareholders".
He added: “Importantly, the successful execution of this transaction means there will be a significant increase in TT’s annual free cash flow."
The success of the transaction is evidence of how important the member experience is for pension schemes looking to derisk, said Julian Hobday, a director at Legal & General Retirement Institutional.
“We are extremely proud of the high level of service we offer at Legal & General and we look forward to welcoming the scheme’s members,” he added.
TT Electronics and the trustees were advised on the transaction by Mercer. Patrick Lloyd, Mercer’s transaction lead, said that in an increasingly competitive buy-in market, the key to a successful transaction is preparation.
“This transaction is built on a foundation of many years of close collaboration between the company, the trustee and their advisers doing just that,” he said.
Investment advice was provided to the trustees by Schroders Solutions. Law firm Mayer Brown also assisted, and secretarial services and coordination were delivered by Pi Consulting. Law firm Eversheds Sutherland gave advice to Legal & General.
Has it become harder for schemes to secure a buy-in?
