Legal & General has agreed a £400 million Assured Payment Policy (APP) transaction with the Legal & General Group UK Senior Pension Scheme.
The de-risking transaction provides investment risk protection for the pensions of around 200 deferred members and 385 pensioner members.
The deal was completed in December and follows Legal & General’s previous £250 million APP transaction with the AIB Group UK Pension Scheme in late 2019.
Legal & General’s APP solution provides pension schemes with a method of liability cashflow matching, selectively insuring against investment related risks such as changes in asset yields, interest rates and inflation.
In this case, the product’s flexibility allowed for the transaction to be structured around the Scheme’s existing buy-in arrangements.
Frankie Borrell, Head of Client Solutions, Legal & General Retirement Institutional, said, “We are delighted to have delivered improved certainty for the trustees and members of our Legal & General Group UK Senior Pension Scheme.
“We look forward to working with the Trustee in the years ahead as they progress towards their ultimate goal of full pension scheme buyout.
“Our innovative APP solution allows pension schemes to lock down investment and inflation risk on attractive terms, with the ability to then add longevity and wider demographic risk protection in the future through conversion to a bulk annuity.
“With the market volatility that we’ve observed over 2020 we expect to see continued interest in solutions which create greater certainty for pension schemes earlier in their de-risking journey.”
Chris Martin of ITS, Chair of the Trustee, Legal & General Group UK Senior Pension Scheme, added,
“The APP represents a very significant moment in the Scheme’s lifetime as we move closer to securing our members’ benefits. We were very grateful to our advisers LCP, Gowling WLG, Redington and Premier Pensions for their guidance and support through this transaction.”