UK - The T&N Retirement Benefit Scheme has agreed a £1.1bn ($1.8bn) buy-in after its funding level was found to exceed the threshold for Pension Protection Fund entry.
The trustee for the scheme - which entered the PPF assessment period in 2006 after the insolvency of its sponsoring employer in 2001 - said the agreement would guarantee at least PPF level benefits for all 30,000 members.
Mercer principal David Ellis - whose team advised the trustee - described the deal with Legal & General as a "landmark" and said the process had been long and complex.
"To resolve the schemes finances - tracing beneficiaries, working out entitlements under the PPF assessment period - and then do a formal PPF valuation all took considerable time," he said.
Once this established that the scheme was able to pay PPF level benefits from its assets the trustee was legally required to seek to wind up the scheme outside of the lifeboat fund.
Tim Culverhouse, managing director of Alexander Forbes Trustee Services - which acts as trustee for the scheme - said the scheme opted for L&G after a competitive selection, due diligence and negotiation process.
The deal is initially structured as a buy-in with the insurance policy being held as an asset of the scheme but will be secured as a buyout with the policies administered by L&G once the scheme is wound up.
Culverhouse said members could potentially receive benefits above the 90% guaranteed by the PPF once the deal is finalised - but would not get their benefits in full.
"While it is a source of regret that the scheme's members will receive reduced pensions, most will receive the majority of their original entitlement," he said.
L&G head of business development for bulk purchase annuities Tom Ground (pictured) said the transaction demonstrated the firm's ability to win large-scale bulk annuity business.
Ellis predicted a number of schemes currently in PPF assessment could potentially find themselves in the same position as T&N and be required to seek a buyout to secure member benefits.
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