Legal & General Assurance Society Limited has entered into a £1.6 billion pension risk buy-in deal with the National Grid UK Pension Scheme (NGUKPS).
The policy covers 6,000 pensioner members from Section B of the £20 billion defined benefit pension scheme, which is primarily for previous employees of the gas industry.
This buy-in is expected to further protect the future funding of the Scheme by reducing the potential impact of changes in life expectancy, and by removing financial risks such as interest rate and inflation changes.
Going forward, pension payments will continue to be administered by National Grid UK Pensions Operations and there will be no impact on the members, whether their benefits are covered by this arrangement or not.
“We are delighted to have been able to work with the Trustees to complete this transaction,” said Laura Mason, CEO, Legal & General Retirement Institutional.
“We were pleased to have been able to leverage our existing asset management mandate with the Scheme to ensure a smooth process and provide further security to the Scheme members.”
Donald Simpson, Trustee and Chair of the Funding and Investment Committee, National Grid UK Pension Scheme, also commented: “We are pleased to take another step in our de-risking journey. All parties have worked collaboratively to reach this positive outcome, which further protects the security of our members’ benefits.”
“This represents a further step in our long-term pensions strategy, and reduces the exposure to long-term pensions risks for National Grid and gas consumers,” added Andy Agg, CFO, National Grid plc.
The Trustees were advised by Aon and supported by the Scheme’s in-house team during the deal.
Additionally, Sackers provided legal advice to the Trustees, with actuarial support provided by Willis Towers Watson, the Scheme Actuary. Legal & General were advised by Macfarlanes.
“We are proud to continue supporting the Trustees and National Grid in navigating through a busy bulk annuity market,” said Martin Bird, Senior Partner at Aon.
“This transaction further underlines the importance of having a robust Trustee decision-making framework and ability to move quickly when opportunities arise.”
National Grid UK entered into a similar £2.8 billion pension buy-in transaction with Rothesay Life last month.