UK - Trustees of the London Stock Exchange Group's defined benefit plan have sealed a groundbreaking £203m ($329m) deal to insure its pensioner members' liabilities after reporting a £33m increase in the scheme's surplus.
The buy-in will see Pension Insurance Corporation insure all current pensioner members - for a premium of £158m - and automatically insure non-pensioner members as they reach retirement.
It sees PIC take on all investment, inflation, and mortality risks for the scheme's liabilities relating to retired members - valued at £140.5m for those retired before 31 March.
The exchange said the excess of the insurance premium over the liabilities had been funded by the scheme's surplus - which rose from £4.6m to £37.6m over the year.
The ongoing obligation to insure future retirements is on pre-agreed terms for the next five years for a total premium currently estimated to be £45m.
PIC co-head of business origination Jay Shah said he believed the deal was the first of its kind.
"It's good for the scheme because it provides them with a huge amount of stability over pricing and availability of insurance and great for us because it means we have a long-term relationship with a scheme," he said.
In March PIC revealed its new business had fallen over the year, due to a quiet market, but group chairman Mark Weinberg predicted the bulk annuities market would pick up in 2011 with a number of multi-billion dollar schemes moving to insurance.
"This is an indication of that," said Shah. "Like this transaction, big schemes might not de-risk all be in one go. There are some interesting innovative ways of de-risking over time. You'll find a lot of the billion pound plus schemes will be looking at these types of structures."
Enhanced powers for The Pensions Regulator (TPR) to prosecute and fine company directors who "wilfully or recklessly" put their defined benefit (DB) pension scheme at risk will be hard to enforce, commentators say.
Melrose has pledged to contribute up to £1bn to GKN's pension schemes as part of a final offer to acquire the engineering business.
Existing master trusts will be forced to pay £41,000 when applying for authorisation under the upcoming regime, the government has confirmed.
UPDATE 2 - DWP publishes DB white paper: Stronger powers for TPR, DB chair statements to be introduced
The Pensions Regulator (TPR) will be given the power to fine company bosses who deliberately puts their defined benefit (DB) schemes at risk, the government has confirmed.