Pensions insurer Rothesay has completed a £4bn buy-in with the Co-op Section of the Co-operative Pension Scheme, securing the benefits for almost 50,000 members – 17,655 pensioners and dependants as well as 31,896 deferred members.

The scheme is sponsored by the Co-operative Group, a UK consumer co-operative with businesses across food, funerals, insurance and legal services. 

Rothesay said it had been working with the scheme and its advisers for 18 months to structure this transaction. It has now completed over £5bn of pensions derisking for the Co-operative Pension Scheme, following a £1.2bn full scheme buy-in with the Bank Section of the scheme.

Sammy Cooper-Smith, head of business development at Rothesay, said economic conditions continue to contribute to a “very busy bulk annuity market”, as “more schemes than ever pursue insurance solutions”. 

The scheme is in surplus and has used illiquid assets to pay the premium.

Cooper-Smith said: “One of the impacts of scheme funding levels improving so quickly is the increased number of clients coming to market with a greater exposure to illiquid assets. Rothesay’s Illiquid Asset Transition team is purpose-built to support these schemes in their derisking journey and was delighted to achieve this for the Co-op scheme members.”  

This is the final step for the scheme to secure member benefits as part of a long-term plan, as the scheme had three previous buy-ins with other insurers in 2020.  

Chris Martin, professional trustee at Independent Governance Group and chair of trustees, said: “We are delighted to have achieved this significant milestone in our derisking journey, providing members with greater security. Through a collaborative approach and our advisers’ commitment to our objectives, plus Rothesay’s flexibility and partnership, we were able to navigate a significant period of volatility.” 

The lead broker on the transaction was Aon. Rothesay and the scheme received legal advice from Gowlings and Linklaters, respectively. Addleshaw Goddard provided the Co-op with legal advice. Mercer acted as scheme actuary and the trustee’s investment adviser. 

Rothesay won at least five other buy-in deals this year to date: £260m buy-in transaction with the Smith & Nephew UK Pension Fund; £160m with the Repsol Sinopec Pension and Life Scheme; £1.4bn buy-in with the Safeway Pension Scheme; £34m with the Shoe Zone Group Pension Scheme; and £762m with the 1967 Section of the Morrisons Retirement Saver Plan.

The deal is being announced at the same time as a large buy-in between the Boots Pension Scheme and Legal & General for £4.8bn, which also involved illiquid assets.