Lane Clark & Peacock LLP (LCP) have announced that they advised UK home and general merchandise retailed Home Retail Group in a £280m pensioner buy-in transaction for their pension scheme which saw them de-risk by transferring their liabilities to insurers.
This buy-in transaction is notable, say LCP, as it is the 50th pension buy-in or buy-out transaction with a value of £100m or more, showing the increasing demand from pension schemes to offload liabilities including longevity risks.
The deal actually completed back in May but was only announced recently in Home Retail Groups results. The deal involved Home Retail Group entering into an agreement with Prudential Retirement Income Limited for a bulk annuity policy to cover existing pensioners in payment. This eliminates the financial risks associated with exposure to investment, inflation and mortality risk said Home Retail group. It completed almost like a swap as there was no need for the sponsor to pay any additional cash towards the transaction.
LCP partner Clive Wellsteed said, “The trend for pension schemes to transfer risk to insurance companies is a growing one, but it is set against a back-drop of volatile financial markets. Deal flow is likely to remain lumpy as market conditions ebb and flow, but this latest milestone paints a picture of a vibrant market that has come of age.”