Legal & General has agreed a buy-in with Heathrow’s BAA Pension Scheme for around £370m.
The buy-in represents the Scheme’s second Pension Risk Transfer (PRT) transaction with Legal & General, following a £325m buy-in in 2018 covering 1,300 retirees. Legal & General has now secured the benefits of nearly 3,000 members of the Scheme, demonstrating its commitment to a long-term relationship with the Trustee. This latest buy-in is slated to protect the benefits of more than 1,400 retirees.
Adrian Somerfield, director, Legal & General Retirement Institutional, said: “Having built trust and a strong relationship with the Trustee over a number of years, we are delighted to have secured the retirement benefits for another 1,400 members. Our umbrella contract ensures we are able to move forward with the Trustee in a swift and effective manner as they continue their de-risking plans.”
The announcement comes just after L&G analysts predicted continuing growth in the pension transfer market for 2022, going into 2023. The company’s Global PRT Monitor reported a strong H2 2021 in both the UK and US markets, with L&G recording an estimated $38-40bn (£28-30bn) in total annual transaction volume, far surpassing the $27 billion reached in 2020.
Meanwhile, in the UK, the Monitor reported that the second half of the year was one of the largest and busiest six-month periods in the history of the market, with around £22bn of retirement income secured. Overall, it estimated the total transaction volume for the year approached £30bn, with growing demand driven by a number of factors, including improved pension scheme funding levels and competitive longevity reinsurance pricing.
Other firms have posited that the PRT market will have a boon year in 2022. Around two weeks ago, WTW released a report called A Bright Future Ahead that predicted that this year would be the fourth in a row that bulk annuities ‘approach a volume exceeding £40bn’.
The Trustee was advised on the transaction by LCP and legal advice was provided to the Trustee by CMS. MacFarlanes provided legal advice to Legal & General.