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The DB (UK) Pension Scheme has completed a £1.1bn full buy-in, insuring the benefits of around 4,000 members.
The scheme, sponsored by a subsidiary of Deutsche Bank AG, has completed its third buy-in with Legal & General, bringing its total insured liabilities with the firm to £2.1bn. This deal follows a £570m buy-in announced in 2021 and a £500m transaction in 2023.
The scheme had an umbrella agreement in place with L&G. It has implemented a phased buy-in strategy over the past four years to fully insure all accrued benefits, with the facility to accommodate new benefits for 250 active members as they accrue additional service.
Trustee chair Michael Wrobel said the scheme had reached its long-term target significantly ahead of the plan set in 2018.
“The existing relationship with Legal & General has been fundamental in helping us achieve this and allowed us to move quickly to lock in attractive pricing for this and previous transactions,” he noted.
Jeremy Sowden, head of global pension and benefits at Deutsche Bank AG, said: "The bank and trustee took the opportunity presented by market conditions to fully insure accrued liabilities much earlier than previously planned, and the resulting successful transaction represents an important milestone in our global strategy to manage defined benefit scheme risk.”
Sowden said more than £3bn of pension risk has been removed from the bank as all accrued benefits across the two UK schemes have now been insured. In 2023, Aviva revealed it had bagged a £400m buy-in with one of the schemes.
LCP advised the trustees on the latest transaction. Partner Charlie Finch called the deal “a textbook example of a successful phased buy-in strategy”.
CMS gave legal advice to the trustees, while DLA Piper UK were the lawyers for Legal & General.
Andrew Kail, chief executive of institutional retirement at L&G, said the Deutsche Bank scheme had been a long-standing asset management client of the group.
“Our robust capabilities in pension risk transfer and asset management are central to the group’s new growth strategy,” he remarked.
At its 2024 half year results, L&G said it wrote or was in exclusive negotiations on £5bn of pension risk transactions and has now completed the deals for which it was in exclusive negotiations. They include three buy-ins with unnamed pension schemes worth a combined £2.3bn, according to the insurer, who stressed that the Deutsche Bank deal was in addition to that. Earlier this month, mallowstreet reported that the Credit Suisse UK pension scheme has completed a £1.3bn full buy-in with L&G.
Larger transactions are starting to come through in a year that has not seen any ‘supersized’ deals. The largest to date has been Aviva’s £1.5bn full buy-in of liabilities from the Michelin Pension and Life Assurance Plan.
The pensions risk transfer market continues to thrive while funding levels are high. Nearly half of 140 trustees, consultants and lawyers expect transactions to reach between £50bn and £60bn next year, according to DB insurer Pension Insurance Corporation.
Housebuilder secures £18m of liabilities with Just
Elsewhere, St Modwen Pension Scheme, for employees of housebuilder St Modwen Properties, in August completed an £18m full buy-in with Just Group, covering 270 members, including 55 deferreds.
XPS Group were the lead advisers, and Dalriada Trustees sat on the board of the scheme. Just Group used in-house legal support with legal advice provided to the trustees by Squire Patton Boggs.
In H1 2024, Just Group reported record total DB sales of £1.9bn (up 31% from £1.4bn in H123) and completed 55 transactions (up 57% from 35 in H123).
Just’s business development manager Ross Breckon said there was a “vibrant insurance derisking market for schemes of all sizes”.
Along with a number of smaller transactions, Just, which has been expanding its team, wrote a £400m buy-in earlier this year.
