The Marks and Spencer Pension Scheme has completed buy-in deals worth £1.4bn with two insurers, mirroring similar transactions last year.
The policies were purchased last month with Phoenix and Pension Insurance Corporation (PIC), and mean longevity exposure for two-thirds of current pensioners is now hedged.
In this round of bulk annuity purchases, PIC insured around £900m of benefits for 10,700 members, while Phoenix covered £460m of benefits for 5,000 pensioner members.
The deals build on separate transactions, completed last year, totalling £1.4bn with Aviva and Phoenix Group. The latter insurer benefitted from pre-agreed umbrella contract terms, agreed during the last transaction, allowing the deal to be completed "quickly and efficiently", it said.
The scheme, which closed to future accrual in 2017, has now insured around 30% of its total liabilities. As at 30 March, the company recorded £9.3bn of pension liabilities on an accounting basis, compared to £10.2bn of assets, leading to a surplus of £923m.
Scheme trustee chairman Graham Oakley said: "We are pleased to announce the purchase of these additional buy-in policies, which provide an important contribution to the trustees' ongoing objective of reducing the longevity risk in the scheme to increase the security of all members' pensions.
"A collaborative approach with the company together with efficient and effective advice continues to deliver well-executed and well-priced transactions."
Lane Clark and Peacock acted as lead adviser to the transaction, while the sponsor was advised by Hymans Robertson. Linklaters and CMS provided legal advice to the trustees and PIC respectively.
Hymans Robertson partner Richard Wellard said: "This will undoubtedly be one of many large buy-in transactions to complete this year. Setting a strategy and timing transactions in a way that works for both the company and the trustee is very important.
"Shared objectives, a collaborative approach and continual communication are so important in the de-risking of large pension schemes. This is a marathon, not a sprint."
After last year saw a record-breaking bulk annuity market, with over £23bn of deals transacted, experts predict this year will prove bigger with a number of large full-scheme buyouts currently in the pipeline.
PIC said around £40bn of pension scheme liabilities are currently been quoted on for bulk annuities this year. The insurer's head of origination structuring Uzma Nazir said she was "proud" of the deal, despite "Brexit-related market volatility".
Other insurers have told PP that they believe Brexit is one of a number of factors acting as a catalyst for transactions as schemes, worried about the potential financial impact of the currently unknown outcome, seek to insure benefits while funding levels are high.
Phoenix head of bulk purchase annuities Justin Grainger said the marketplace was growing, and the transaction demonstrated the insurer was "well-placed to offer attractive solutions" to defined benefit schemes.
The insurer only entered the bulk annuity market last year with its first external deal with the M&S scheme. It said it will "proceed with proportionate transactions which meet its state acquisition criteria and are funded through existing resources".
The M&S scheme benefits from two limited partnership agreements whereby, under the first, it receives £71.9m of annual distributions until June 2022, and, under the second, £36.4m annually from June 2017 to June 2031.
The first of the arrangements is included within the scheme's total assets, and is valued at £278.5m, while the second arrangement is not recorded in its entirety, as it is not a transferable financial instrument, but recognised as an annual contribution.
Elsewhere in its results published yesterday (22 May), the high street giant recorded a £20.5m charge in respect of equalising GMPs, representing around 0.2% of liabilities.
Aviva Life & Pensions has concluded an £875m buy-in with its own staff pension scheme, following on from a similar transaction last year.
Just Group has completed a £74m pensioner buy-in with the UK pension scheme of a US-listed engineering business.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.
The Baker Hughes (UK) Pension Plan has secured approximately £100m of liabilities through a buy-in with Just Group.