This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
The DB (UK) Pension Scheme has secured the benefits of around 2,000 retirees and deferred members with an insurer in a roughly £500m buy-in, bringing its total buy-in transactions to £1.5bn, about half of its liabilities. This latest deal is the scheme’s first to include deferred members.
Legal & General Assurance Society completed the scheme’s third buy-in, having already written a circa £570m buy-in in February 2021. In April this year, the scheme bought in pensioners for £400m with Aviva.
This is the scheme's first transaction to include deferred members, showing that insurers and reinsurers are becoming more comfortable with taking on non-pensioner liabilities. More than three-quarters of buy-in and buy-out volumes in 2022 included deferred pensioners, up from around a quarter in 2016, according to consultancy LCP.
Deutsche's latest transaction means about half of the scheme’s total liabilities have now been insured, including all pensions in payment.
The scheme, a client of Legal & General Investment Management, used an existing umbrella contract with Legal & General to complete the buy-in quickly and on the same commercial terms.
Trustee chair Michael Wrobel said the existing relationship with L&G, including the umbrella contract, resulted in a smooth and efficient process, adding: “The trustee and the bank remain ready to continue to take advantage of future opportunities to further derisk as they arise.”
Head of global pension and benefits at Deutsche Bank AG, Jeremy Sowden, said: “We will continue to work with the trustee to extend the buy-ins as further opportunities arise. The existing relationship with Legal & General allowed us to move quickly to lock in attractive pricing and is an excellent result for all parties.”
The latest transaction “demonstrates that partial buy-ins continue to be an effective derisking tool for larger schemes on their way to full insurance”, said Aysha Patel, new business and origination lead at L&G Retirement Institutional.
LCP was lead transaction adviser and provided strategic longevity derisking advice to the trustees. LCP partner David Fink said careful thought had gone into the transaction structure to allow a proportion of deferred liabilities to be included.
“The phased buy-in strategy has been very successful for the scheme, and we were able to leverage its existing relationships and the work completed for previous transactions to secure highly attractive pricing in what is proving to be a very busy market in 2023, with many schemes competing for insurer attention,” he said.
CMS gave legal advice to the trustees on the transaction, while Aon is the scheme actuary and investment adviser, and Slaughter and May the ongoing legal adviser. DLA Piper UK provided legal advice to Legal & General.
Are you finding it hard to get quotes from insurers for your scheme at the moment?
