Aerospace scheme secures buy-in, baking co-op derisks with L&G

Cobham Pension Plan agrees £530mn buy-in

The Cobham Pension Plan has agreed to a £530mn bulk annuity purchase with Phoenix Group subsidiary Standard Life, securing the benefits of around 3,000 members.

Building on a previous £280mn buy-in deal secured with Rothesay in 2013, the pension fund, one of three defined benefit schemes sponsored by aerospace company Cobham, which together are worth £967.2mn, has now secured the benefits of all its members with the new annuity purchase.

Mike Jaffe, Law Debenture director and Cobham Pension Plan trustee chair, said: “This latest step fulfils the derisking plan and means the pension plan is now immunised against the volatile economic market backdrop.”

Cobham chief financial officer Sven Lewis added: “Since Advent [International’s] acquisition of Cobham nearly three years ago, we have had a clear plan to derisk our pension scheme, which has included over £150mn of increased cash investment from Advent into the plan.

“The deal with Standard Life completes that process and delivers long-term security for our pension fund members.”

While LCP acted as the lead adviser, the trustee was provided with additional support from AR Pensions & Wellbeing Consulting.

This article originally appeared on MandateWire.com

Flour Milling and Baking Research Association signs derisking deal

The circa £15mn Flour Milling and Baking Research Association Pension and Assurance Scheme has agreed a £10mn assured payment policy with Legal & General Assurance Society in a bid to derisk.

The transaction marks the scheme’s first APP with incumbent manager L&G. The scheme, sponsored by a research co-operative, has partnered with Legal & General Investment Management for more than 24 years.

An APP is similar to a buy-in but does not cover longevity risk. In exchange for a premium paid to the insurer, the scheme will receive a stream of cash flows that match its liability profile and vary with changes, such as in interest rates or inflation.

With insurer capital backing the contract, this therefore removes investment risk to a fuller extent than schemes can achieve by managing assets themselves in a liability-driven investment solution.

Dalriada Trustees lead trustee Tiziana Perrella said: “Using the APP, the trustees were able to precisely hedge the bulk of the risks involved in running the scheme, increasing the security of the members’ benefits on attractive terms.”

First Actuarial advised the trustees on the transaction, alongside Gowling WLG, who provided legal advice. Little & Company provided advice to the sponsor.

This article originally appeared on MandateWire.com