Bulk annuity update: Full scheme buy-ins for Next, Robertson Research

Pension Insurance Corporation (PIC) has sealed a full scheme buy-in with the 2013 Next Group Pension Plan worth £510m.

The deal marks the scheme’s second buy-in, following a £100m buy-in in 2018 and covers more than 3,600 pensioners and deferred members.

The scheme is Next’s primary defined benefit (DB) pension plan and had £668.4m in assets as of 28 January 2024, according to the company’s most recent annual results. This meant the scheme had a surplus of £59.3m.

Vicky Paramour, chair of the scheme’s trustee board and managing director of Law Debenture, said: “This process has demonstrated how constructive collaboration between [the trustees], sponsor and respective advisers can result in an excellent outcome for members.”

The trustees were advised by LCP, with legal advice from Herbert Smith Freehills.

Research company secures £45m buy-in

Separately, the trustees of the Robertson Research Group Pension Scheme have secured a full scheme buy-in worth £45m with Aviva.

The deal completed in the fourth quarter of 2023 and secured the benefits of 217 pensioners and 232 deferred members, according to K3 Advisory, which advised on the transaction.

John Nestor, professional trustee at Capital Cranfield and chair of the scheme’s trustee board, said: “This was quite a complex transaction, and we were really pleased with the innovation and pragmatism displayed by all advisers – clearly demonstrating what can be achieved when all parties work together. We have now been able to successfully secure the benefits of our members.”

The transaction required all parties to address liquidity issues within the scheme’s investment portfolio, said Adam Davis, managing director at K3 Advisory.

“With many schemes’ journey time to buyout having reduced materially over recent years, illiquid assets are now an increasingly common issue in our experience,” he added. “But the good news is there are several practical ways to resolve the issue and transact, as this deal shows. It was also particularly pleasing to be able to secure all member benefits upfront.”

Surplus payments for members and sponsor after £26m buyout

Specialist engineering company Standard Group has completed a £26m buyout for its defined benefit (DB) pension scheme, including the distribution of surplus assets to the sponsor and members.

Zedra, the sole trustee for the scheme, worked with First Actuarial as adviser and law firm Osborne Clark to complete the transaction with insurer Just Group.

Following the selection of Just Group, surplus assets were used to enhance member benefits and reimburse the employer.

Michael Herd, transition relationship manager at Just Group, praised the collaborative work and efficient completion of the deal amid a busy pension insurance market.

Data confirms record year for insurance transactions

New data collated by LCP show that the total volume of buy-ins and buyouts completed in 2023 reached £49.1bn – a record for a calendar year.

On top of this, longevity swap deals totalled £10.3bn. Combined with Clara Pensions securing its first transaction in November, this brought total pension risk transfer activity to £60bn for the year.

The figure was also aided by two new entrants to the bulk annuity market, with M&G and Royal London both securing their first deals in the second half of 2023.

Charlie Finch, partner at LCP, said: “2023 was a year of real innovation. Insurers and advisers contended with an unprecedented number of large and complex transactions.

“Last year our Illiquid Assets Solutions Group structured the transfer of over £1bn of property as part of British Steel Pension Scheme’s record £7.5bn of insurance with L&G and designed a multi-prong approach to illiquid assets for RSA’s £6.5bn transaction with PIC.

“Along with developments in third-party financing, this has really expanded the options available to schemes seeking to de-risk through buy-ins and buyouts.”