Legal & General (L&G) has agreed a £275 million buy-in transaction with the Trustee of the Hitachi UK Pension Scheme.
This is L&G’s first deal with the scheme, and covers the scheme’s remaining uninsured deferred members and retirees since the it underwent its first buy-in transaction with Scottish Widows in 2018.
By locking the transaction price to the assets of the Scheme, L&G was able to give the Trustee a high degree of transaction certainty whilst enabling them to take advantage of both favourable pricing conditions and market capacity.
Gavin Smith, Pricing and Execution Director commented: “We are pleased to have established this relationship with the Hitachi trustees and helped them secure their members’ long-term financial security.
“This buy-in, in particular, demonstrates our ability to insure pension schemes with a high proportion of deferred members, showing that pensions de-risking isn’t just the preserve of mature pension schemes. It also demonstrates the value to trustees and sponsoring companies of being able to move quickly when pricing conditions are favourable to secure their members’ benefits.”
Jo Myerson, Chair of the Trustee added: “Securing members’ benefits is the ultimate objective for all trustees. We worked with two strong insurers to meet this objective for the Scheme and were able to take advantage of favourable market pricing due to effective decision-making achieved as a sole corporate trustee. Aon successfully led the transaction and, with legal advice from Pinsent Masons, negotiated a strong outcome, delivering financial security to members for the future.”
The Trustee was advised on the transaction by Aon, while legal advice was provided by Pinsent Masons LLP. Macfarlanes provided legal advice to Legal & General.
Michael Walker, Principal Consultant, Aon stated: “This transaction completes the Hitachi UK Pension Scheme’s phased buy-in journey in just under 3 years – substantially ahead of the original target of 10 years. This acceleration has been possible due to strong asset performance, favourable insurance pricing, good preparation and nimble decision making by both the Trustee and the Companies. Aon has led both transactions and allowed the Scheme to capitalise on excellent opportunities presented in 2018 and 2020.”