Legal & General has revealed the completion of a bulk annuity transaction with the Hitachi Data Systems Retirement Benefits Plan in the first half of 2019.
The transaction covered around 120 members and was the third to be completed between the two, following buy-ins in 2012 and 2013.
This latest transaction provides insurance cover for all the remaining members of the plan, both those who have retired since 2013 and deferred pensioners.
L&G says the deal required an unorthodox approach in order to align with the plan’s construct and provisions for members’ benefits.
Each member’s pension is based on the higher of their earnings related defined benefit (DB) pension and their defined contribution (DC) account over their active service period.
Subsequently, L&G found a solution which allowed trustees to ensure the members continue to receive a pension based on the higher of the DB and DC benefit calculation until the plan is wound up and bought out.
This solution was agreed ahead of transacting, ensuring that the deferred pensioner members have suitable time to consider their options before a bulk crystallisation event occurs at buyout.
“We are delighted to have helped Hitachi and the Trustee over the past seven years. This is another great example of a group of trustees and their sponsor having the confidence and trust to start and finish their de-risking journey with us,” said Frankie Borrell, Director, Legal & General Pension Risk Transfer.
“The dual benefit dynamic presented some interesting challenges for the transaction, but all parties showed great focus on delivering an outcome that had members’ interests at the heart.”
“We are pleased to have taken this latest important step in our de-risking journey,” said Neville Byford, Chair of the Sefton Park Trustee Company, the Trustee of the Plan.
“All parties worked together to find a solution which meets the objectives of the Trustee and Plan sponsor whilst protecting the security of members’ benefits.”
Trustees were advised by Willis Towers Watson providing actuarial and consulting advice and gunnercooke providing legal advice. CMS provided legal advice to L&G.