The trustees of the Dresdner Kleinwort Pension Plan have completed a full £1.2bn buy-in with Pension Insurance Corporation - covering the scheme's £900m final salary section as well as a £300m money purchase section.
The transaction allowed members in the money purchase section with hybrid defined contribution (DC) and defined benefit (DB) benefits to choose to transfer their benefits to an alternative arrangement, or to convert them into pure DB benefits. The DB benefits were then insured under the terms of the full buy-in.
The scheme is sponsored by Commerzbank AG following the acquisition of Dresdner Bank in December 2009.
David Curtis, who represents LawDeb Pension Trustees as trustee chairman of the Dresdner Kleinwort Pension Plan, commented on the deal. He said: "We are very pleased to have completed the insurance of both sections of the plan with the support of Commerzbank.
"This transaction required a high level of creative thinking by our advisers, LCP, in designing a structure combining the member choice programme with the insurance transaction. I want to thank PIC for their flexibility, especially in relation to the insurance of the money purchase section, which is an unusual transaction, and, I believe, a great result for the membership."
PIC head of origination structuring Uzma Nazir added: "Given the unusual hybrid DC and DB benefit structure the trustees required flexibility from us to ensure that both sections of the plan were insured in line with their requirements. We are of course delighted to complete this, the biggest transaction of the year so far and one of the largest to date.
"Affordability of buy-ins and buy-outs has improved significantly in the past year and this is driving a record number of schemes and companies seeking to insure in full."
LCP acted as lead adviser on the transaction and legal advice was provided by Linklaters.
LCP de-risking practice partner David Salter said: "We are pleased to have used our expertise to design a structure that provided members with flexibility and a high level of certainty over their options, whilst dovetailing with the insurance transaction to give the Trustees and Commerzbank cost certainty."
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