The Littlewoods Pensions Scheme has completed a buy-in covering just under £930m of around 6,500 members’ benefits with Rothesay Life, the majority of which relate to deferred members.
The bulk annuity deal is the scheme's second, following an £880m insurance transaction with Scottish Widows in 2018.
The latest deal was completed last month, with the majority of the process running throughout the Covid-19 lockdown. All teams worked remotely to agree and secure the transaction amid volatile pricing, including negotiating a price lock to "immunise" the scheme against further movement in markets.
The scheme had benefitted from a de-risked funding position on the back of the 2018 buy-in, having hedged its interest rates and inflation exposures early on, allowing it to take advantage of attractive pricing opportunities arising from movements in corporate bonds.
Trustee chairman Colin Thwaite said: "I am delighted that, through this transaction with Rothesay Life, we have further secured the pension benefits for all our members. Guaranteeing our pension obligations has been our long-term goal and it is testament to the quality of our advisers and the longstanding support and collaboration with [scheme sponsor] The Very Group and its shareholders that we could secure this transaction in the current market."
The scheme was advised by Lane Clark & Peacock (LCP), Arc Pensions Law, Mercer, and Willis Towers Watson, while Rothesay Life was advised by Gowling WLG.
Rothesay Life head of business development Sammy Cooper-Smith said: "The trustees have been in close contact with the marketplace for a number of years, keeping us informed of progress on their de-risking journey.
"This has kept the scheme at the forefront of the market, which has enabled the trustees to secure the benefits of an opportune time from a funding perspective. We are delighted to have been entrusted by the trustees to provide the scheme benefits to over 6,000 beneficiaries."
This is the third deal announced by Rothesay Life this year, following a £255m buy-in with the Xylem UK Pension Plan and a £290m buy-in with the IPC Media Pension Scheme. In total, just over £12bn of bulk annuities have been confirmed across the market.
Mercer partner Steve Jones, who acted as scheme actuary, said: "The issues arising from the need to equalise benefits following the Lloyds (GMP) ruling were presenting an obstacle to the scheme's de-risking plans. The legal, administrative, and actuarial challenges were significant.
"However, working with the trustees and Arc Pensions Law, we developed an innovative approach that met the trustees' obligations and helped to enable this second transformative buy-in to proceed."
LCP partner David Stewart added: "With deferred members making up 90% of the membership for this buy-in, this transaction shows that attractive pricing is available at scale, with the right approach, for schemes with long-dated liabilities."
Arc Pensions Law senior partner Anna Rogers commented: "This transaction was completed at speed in challenging circumstances alongside innovative legal and actuarial work to optimise insurer pricing."
Willis Towers Watson senior director Matt Johnson said: "Over the past 14 years, the trustees have worked with Willis Towers Watson's delegated investment team to earn the return on their assets needed, while carefully managing investment risk, to reach this point. We are very proud to have been part of the Littlewoods Pensions scheme's successful journey to date."
There have now been a total of over 50 buy-in and buyout deals of over £500m announced since 2007. The full list is as follows...
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