T&N buys out £1.1 billion of liabilities with bulk annuity

The trustee of the T&N Retirement Benefits Scheme has bought out £1.1 billion of liabilities in one of the biggest bulk annuity transactions ever seen in the UK.

The T&N scheme has been in thePension Protection Fund (PPF) assessment period since 2006. Because the scheme’s assets and liabilities were valued as exceeding the threshold below which the PPF would automatically pay members’ benefits, the trustee of the scheme was required to wind up the scheme outside the PPF and purchase pension benefits on behalf of members from an insurance company. Legal & General were selected following a competitive selection, due diligence and negotiation process. Mercer advised the trustee, with Allen & Overy offering legal advice.

Alexander Forbes Trustee Services acted as sole trustee to the scheme and managing director Tim Culverhouse said: “The trustee, Legal & General and their advisers have worked hard to make this transaction achievable, given the legal requirement to prepare to wind up the scheme outside the PPF. As a result, I hope it will be possible to apply a small one-off uplift to members’ annual pensions in due course. The scheme’s financial position is such that it remains unable to pay members’ full original pensions.”