The National Grid UK Pension Scheme has agreed a £2.8bn buy-in deal with Rothesay Life, covering the benefits of an unspecified number of pensioner members.
The £20bn scheme is the largest pension fund to have agreed a bulk annuity with any insurer, Rothesay Life said, with the transaction taking place in a record year for the market as a whole.
The deal is the third announced by Rothesay Life in a fortnight, with the insurer now having transacted insurance for around £12.9bn of bulk annuities this year, its best 12-month period to date.
The buy-in, which covers benefits in section A of the scheme, was financed using the scheme's existing UK fixed interest securities. As an asset of the scheme, the agreement will see Rothesay Life provide reimbursement for the payment of benefits to pensioners, and their spouses, aged 70 or under.
Trustee chairman Nigel Stapleton said: "The trustees are pleased to have secured a buy-in transaction with Rothesay Life. The buy-in provides greater certainty and assurance about the future costs of providing members' pensions, and we see this as a positive and prudent way of managing the overall funding and risk of the scheme."
Rothesay Life co-head of business development Sammy Cooper-Smith added: "We are proud to have been selected by the trustees to support them in their long-term de-risking journey. This was a large and complex transaction; our sophisticated risk management systems allowed us to provide economic certainty to the trustees ahead of transacting, despite volatile market conditions in recent weeks."
The scheme was advised by Aon, whose partner Mike Edwards said: "This transaction was a great example of how putting in place a robust process for trustee decision-making, which acknowledges the need for flexibility in the current market, can enable schemes to capture the best transaction opportunities."
The transaction was completed earlier this year, and means Rothesay Life has now completed at least £7.7bn of buy-in transactions this year.
Overall, around £30.8bn of bulk annuity deals have been completed, as well as a £7bn longevity swap, making 2019 the biggest year for pension risk transfer so far.
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.