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."
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.