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Plumbing industry pension scheme secures £560m buy-in

14 September 2017

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The trustee of the Plumbing & Mechanical Services (UK) Industry Pension Scheme has entered a £560million buy-in with Legal & General, covering its pensioner members.

The transaction completed in June 2017 and represents just over 10% of the £5.1bn of bulk annuity business written in the first half of 2017.

The scheme has just under £2bn in total assets and the buy-in reduced the level of risk in its investment strategy, as well as reducing volatility in its funding level.

Alan Pickering, chairman of the trustee said the buy-in was a result of good decisions and hard work.

He said: "The challenges we are facing have been well-chronicled and we are working with the Department of Work and Pensions, The Pensions Regulator, and other stakeholders to find solutions that play fair by all concerned.

Adding that the buy-in is the result of "clear decisions" taken by the trustees, alongside hard work by the executive team, Pickering said employers and members alike will benefit from the increased security the policy brings.

LCP was appointed as an independent specialist buy-in adviser for the transaction.

Clive Wellsteed, head of LCP's de-risking practice and lead adviser to the trustee said there had been significant insurer interest in the transaction.

He said: "We are pleased to have helped the trustee manage the competitive dynamics and achieve such a good result for the scheme."

The transaction included a price lock mechanism that allowed the trustee to lock the buy-in price to the value of the scheme's pooled corporate bonds and then transfer the ownership of these pooled funds to L&G.

Matt Wilmington, director of strategic transactions at L&G said the buy-in demonstrated how the company works effectively with pension schemes.

"Working with our colleagues in LGIM and with the Trustee's adviser, LCP, we were able to transition assets efficiently and generate both cost and time savings," he said.

First published 14.09.2017

Lindsay.sharman@wilmingtonplc.com