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Cancer Research scheme completes £250m buy-in

02 March 2017

Image for Cancer Research scheme completes £250m buy-in

The trustees of the Cancer Research UK Pension Scheme have completed a £250 million pensioner buy-in with Canada Life.

The deal will insure the scheme's 1,355 pensioners and dependant pensioners, which represent a third of the scheme's total obligations.

It was funded by the scheme's assets, primarily the existing gilt holdings.

As well as providing protection against investment market risk, and the risk of members living longer than expected, the pricing also helped to improve the funding position

Ian Kenyon, CFO of Cancer Research UK, said: "We are pleased to secure a transaction that both improves the funding position of the pension scheme and reduces the risk of contributions needing to increase in the future."

"This is another action which serves to reduce our cost base to concentrate spending on research."

The charity says the transaction continues its on-going programme to reduce pension risk.

In 2014 the scheme significantly de-risked the investments by reducing equity exposure and increasing the holdings in assets that move broadly in line with the measurement of the pension obligations.

In early 2016 the scheme further improved the matching of investments to its obligations and, over the course of the year, reduced equity exposure following strong market returns.

Graham Parrott, chairman of the Trustee, said: "We are delighted to have worked in close partnership with our sponsor, Cancer Research UK, to complete this well-timed and efficiently executed buy-in as part of our de-risking programme - the transaction benefits us both."

The Trustee was advised by Lane Clark and Peacock (LCP) and Sacker & Partners.

Kenneth Hardman, partner in LCP's insurance de-risking team, said: "With this transaction Canada Life has established itself within the market for mid-range buy-ins.

"This adds further competition to this part of the market and provides extra insurer capacity to pension schemes looking to de-risk through buy-ins and buy-outs."

Cancer Research UK was advised by KPMG.

First published 02.03.2017

Lindsay.sharman@wilmingtonplc.com