NatWest has insured approximately a third of its pension scheme through multiple buy-ins with Rothesay Life.
Sky News reported yesterday that the bank had completed an £11bn transaction. Rothesay has yet to comment on the report.
The trustees of the NatWest Group Pension Fund completed buy-in transactions in May and September, according to the bank’s financial reports.
In its third-quarter results statement, the bank said: “Around a third of the main section is now covered by insurance policies that give protection against demographic and investment risks, improving security of the member benefits.”
This follows a buy-in completed in May and announced in NatWest’s interim results statement.
While the scheme has not confirmed the total value of the transactions, the main section of the fund had £33.6bn in assets and £26.5bn in liabilities as of 31 December 2023. It has roughly 190,000 members.
A spokesperson for the NatWest Group Pension Fund said: “As part of its long-term strategy, the trustee of the NatWest Group Pension Fund has recently insured around one third of the main section with buy-in policies.
“The buy-in policies are fund investments that further improve the security of member benefits by increasing protection against demographic and investment risks.
“As with other investment decisions there is no change to member benefits and members will continue to receive their benefits directly from the fund.”
Last year, NatWest insured the AA section of its pension fund with Rothesay, valued at approximately £650m.
While Rothesay has yet to comment on the NatWest transactions, it wrote £9.5bn worth of new business in the first half of this year.
In its half-year results statement, the insurer said it was “well-placed to complete some of the largest and most complex transactions in the market, positioning it strongly for the second half of the year and into 2025”.
Charlie Finch, partner at LCP, said: “Rapidly improved pension funding since 2022 has made it much more affordable to de-risk, resulting in a record £50bn of assets being transferred to insurers last year, including large deals by the schemes of Boots, Co-op and RSA Insurance.
“With a reported size of around £11bn, the buy-ins by NatWest’s pension trustees would be the largest volume insured by any UK pension scheme to date, narrowly ahead of the £10bn insured by the ICI Pension Fund.
“It follows the well-established approach of using multiple phased buy-ins to insure some or all of their liabilities – in this case around a third.
“2024 is proving to be another busy year and we’re expecting over £40bn of pension assets to be transferred to insurers to purchase buy-ins.”
