The John Turner Construction Group Ltd has completed a full final salary pension scheme buy-in of the benefits of 18 deferred members and one pensioner. The scheme is now set to move to buyout.  

The transaction was completed with Aviva in March this year, without the need for a sponsor cash injection, and covers all defined benefit members of the Preston-based construction firm. The scheme is set to proceed to buyout and wind-up.  

“When we understood we could purchase a bulk annuity with our available assets, we knew we had to take advantage and approach the market as quickly as we could,” said trustee chair Michael Davies. “We can now be satisfied that our members will benefit from the additional security provided by the insurance contract and proceed to wind up the scheme.”  

Consultancy Broadstone provided annuity broking along with scheme actuary, administrative and investment services to the employer, with CMS giving legal advice.   

Scheme actuary and deal lead George Whitaker from Broadstone said the consultancy took the scheme “from a standing start to transaction in six months, which is a great achievement in this busy market”.  

He added: “We are grateful that Aviva recognises that schemes of this size also need insurance solutions and the ability of streamlined processes to help transactions at the smaller end proceed.” 

Aviva bulk purchase annuity deal manager Andrew Shaposhnikov said the scheme transacted through the insurer’s new streamlined service, Aviva Clarity. This offering “underlines our commitment to helping well prepared schemes of all sizes to secure member benefits via a simple, robust and efficient process”, he added.

The deal comes as the government is looking to set up a public sector competitor to private buyout providers and DB consolidators. This would be run by the Pension Protection Fund. One of the drivers is to provide a solution to small schemes, which the PPF and government believe are among those less able to attract the attention of insurers. Bulk annuity providers are now keen to publicise deals with small schemes to demonstrate that this market segment is being serviced. 

The Association of British Insurers has called the proposed creation of a PPF consolidator “a major and unjustified intervention in a well functioning and competitive market which caters to schemes of all sizes” and said the majority of buyout transactions last year were for schemes with assets of less than £100m.   

Recent small scheme transactions include an unnamed motor industry scheme, the Energizer UK Pension Plan, two schemes of printer firm Epson, and a £1.5m buy-in with the trustees of the Intersil Ltd Superannuation Fund. Last year, a £600,000 pension fund sponsored by architects Scott Brownrigg completed a buy-in covering four deferred members and 16 pensioners. 

Derisking activity has been high and is expected to stay so this year amid strong DB funding levels. In total, insurers wrote about £28bn of buy-ins and buyouts in the second half of last year, up from roughly £16bn in the last six months of 2022, analysis by consultancy Hymans Robertson has found.