On the go: Private equity and infrastructure group 3i has announced a £650m buy-in with Legal & General.
The deal is the latest in a string to be completed by 3i’s defined benefit pension scheme since its first buy-in in 2017.
The company announced it had begun an exercise to explore the possibility of a full buyout for the circa £1bn plan in its recently released annual report.
“This would involve the trustees first completing a further buy-in transaction with an insurance company to secure all remaining uninsured liabilities in the plan, following which the expectation would be that the plan’s trustees would, ultimately and at the appropriate time, exercise their right to convert the buy-in policies held in the plan into individual annuity policies in the names of plan members,” the report read.
The £650m contract with L&G will see 280 pensioners and 570 deferred members’ benefits insured, in one of the largest bulk annuity deals of the year.
Carol Woodley, chair of trustees, said: “This transaction is a significant step forward in providing a more certain and secure solution for members’ future benefits and removes significant risks in the plan that would otherwise be difficult to hedge.
“Achieving this level of security is especially valuable in the current economic climate and we are delighted that, with the support of our advisers, we have been able to take this step sooner than previously anticipated.”
Laura Mason, CEO at Legal & General Retirement Institutional, said: “The successful conclusion of this transaction demonstrates the resilience and continued growth of the bulk annuity market and our sustained activity across all levels of transactions.”
The trustees were advised by LCP, Linklaters and Lincoln Pensions. 3i Group was advised by Mercer and Slaughter and May.
