The InterContinental Hotels UK Pension Plan's trustee has secured a £440m full buy-out transaction with Rothesay Life.

The move insures the defined benefit (DB) liabilities of the scheme, which has around 3,000 members.

The benefits payable to all scheme members has been insured, and this includes any missing beneficiaries that emerge in the future.

Additional future pension increases, which were previously only provided at the discretion of the corporate sponsor, has also been secured and Rothesay Life will be responsible for liabilities relating to data errors.

Sam Dow, InterContinental Hotels UK Pension Plan chairman of the trustee, said: "The trustee's first priority has been to ensure the future security of members' benefits.

"The plan's strong funding, following additional financial support from its corporate sponsor, prompted consideration of a buy-in/ buy-out of the plan's liabilities."

The trustee said it chose Rothesay Life because of its product structure, value-for-money, price certainty and the long-term security it brings as a low risk regulated insurer.

Rothesay Life CEO Addy Loudiadis said: "We are delighted to add the members of the InterContinental Hotels UK Pension Plan to our growing client base. This transaction is a further illustration of the momentum that Rothesay Life has in the pensions de-risking market at a time when that market is showing strong signs of growth."

She added: "This year is shaping up to be one of the most productive in terms of volume of risk transferred to insurers."

As well as having a DB section, the plan also has a defined contribution (DC) section, which is used for auto-enrolment.

The plan will be split to ensure that only the DC obligations will remain with the scheme and with InterContinental Hotels Group (IHG), so that the DB obligations can be fully transferred to Rothesay Life.

The trustees were advised by Mercer, Hymans Robertson and Allen & Overy and IHG were advised by PricewaterhouseCoopers (PwC) and Freshfields.

IHG finance director Tom Singer said: "IHG fully supports the trustees' decision to insure the DB section of its UK Pension Plan with Rothesay Life.

"This transaction will provide additional security for members of the plan and will also help to de-risk IHG's balance sheet by transferring the DB liabilities of the plan to Rothesay Life."

First published 03.09.2013

monique_simpson@wilmington.co.uk