Pension Insurance Corporation (PIC) has agreed a £590m buy-in to insure all pensioner liabilities in the Wolseley Group Retirement Benefits Plan.
The FTSE 100 scheme, which is sponsored by a subsidiary of heating and plumbing product distributor Ferguson, closed to future accrual in 2013. As of 31 July 2016, it had an accounting deficit of £28m, with £1,308m of assets and £1,336m in liabilities.
The deal is the second-largest publically announced so far this year, only surpassed by a £690m buy-in between PIC and an unnamed scheme in June. During the deal, the trustees were advised by Aon and Freshfields Bruckhaus Deringer.
Trustee chairman David Illingworth said the buy-in was the "logical next step" in the scheme's de-risking journey.
"Over the past couple of years we have matched an increasing amount of our assets and liabilities and this strategy has now allowed us to take advantage of market conditions and fully insure these liabilities," he said.
PIC head of business development Mitul Magudia said the bulk annuity environment had led to good pricing.
"We are very pleased to have been able to complete this transaction with the trustees," he said. "As with last year, and reflecting continued low gilt yields, the majority of insurance transactions in 2017 have been pensioner buy-ins.
"The bulk annuity market, driven by high levels of demand and competitive pricing, is currently experiencing a period of significant activity."
Aon partner John Baines added the timing of the deal was "perfection".
"We are delighted to have helped improve both the financial position of the scheme and member security," he said. "The collaborative approach taken by the trustees and the company, using Aon's Compass framework, meant they were able to time the transaction to perfection.
"By spending time carefully preparing an approach to market, they were able to present a compelling business case to insurers. When initial pricing exceeded expectations, the nimbleness of decision-making allowed us to accelerate the project and to lock into very favourable pricing."
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.
There have now been a total of 30 longevity swaps over £1bn publicly announced. The full list, provided by Willis Towers Watson and through PP research, is as follows...
The Reckitt Benckiser Pension Fund has secured a £415m buy-in with Scottish Widows, insuring the benefits of around half of pensioners.