Bulk annuities latest: Scottish Milk scheme insures with Just for £42m

The trustees of The Scottish Milk Limited Retirement Benefits Plan have secured a £42m bulk annuity with Just Group.

The deal insures the pensions of all 452 members of the scheme, which is sponsored by First Milk, a British farmer-owned dairy co-operative.

It includes a deferred premium element, which involves delaying part of the premium payment while still securing all member benefits through a buy-in.

Zahir Fazal, an independent trustee at BESTrustees and chair of the scheme’s board, said: “The transaction marks a key step in the trustees’ journey to enhance the security of member benefits and the trustees are extremely grateful for the ongoing engagement and support from the sponsor to enable this positive transaction to be executed.”

Fazal also praised the collaboration between the sponsor, Just Group and advisers, including PwC, helping to “ensure the scheme was well prepared and the transaction structure suited all parties”.

Dweenisha Caleechurn, head of bulk annuities at PwC, added: “The extensive preparatory work allowed the scheme to be nimble and execute a transaction ahead of planned timescales, evidencing the ongoing opportunities for well-prepared schemes of all sizes in this lively pension risk transfer market.”

The transaction, which completed in June, was one of 55 completed by Just in the first half of this year, up from 35 in the same period last year.

Macmillan strikes buy-in deal with Aviva

Cancer support charity Macmillan has insured its pension scheme with Aviva in a buy-in deal worth £33.7m.

As well as securing member benefits, the charity said it would be able to focus its funds on supporting people living with cancer.

Zedra Governance’s Payam Kazemian, chair of the scheme’s trustee board, said: “This deal represents the culmination of many years of collaborative end-game planning with Macmillan to ensure the pension promises made to members are met in full, while minimising the impact on the charity. It’s great to see all that effort by so many result in this successful transaction.”

Macmillan’s chief financial and operations officer, Karen Watson, said: “Macmillan Cancer Support has always prioritised looking after the scheme’s members, who are current and ex-colleagues of the charity.

“We’re very pleased that, in an uncertain world, members can now rely on the financial strength of Aviva to secure their pensions. It’s also a huge positive for Macmillan’s beneficiaries, as we’ve removed any future risk of Macmillan having to contribute money into the scheme.”

Macmillan used Aon’s Pathway service to complete the transaction, a bulk annuity solution designed to help smaller schemes access the insurance market.

Joe Hathaway, associate partner at Aon, added that the due diligence process included a strong focus on the environmental, social and governance credentials of potential insurers and their administration capabilities.

Journey to buyout now more than five years, data shows

Analysis by Barnett Waddingham has found that defined benefit schemes attached to FTSE 350 listed companies have an average journey time to buyout of 5.4 years.

The data is from the consultancy’s DB End Gauge index, which covers around 150 schemes and uses publicly available data to assess the length of time it would take each one to reach buyout-level funding.

Over the course of July, the index showed the average period to buyout rose from five years to 5.4 years. This is the highest level since January, when the index was 5.7 years.

Barnett Waddingham said this change was “primarily due to a fall in average swap and bond yields, which caused liability values to increase”. This in turn meant a “more cautious outlook for future investment returns”.