The British American Tobacco (BAT) UK Pension Fund has concluded a third pension insurance buy-in with the Pension Insurance Corporation (PIC), insuring approximately £250m (€282m) of liabilities.
PIC has now insured all £4.1bn of the fund’s liabilities, covering the pensions of all 10,000 members, it was announced.
The fund and PIC formed a strategic partnership at the outset to provide a strong foundation and terms for future transactions. This gave the fund a high level of certainty on pricing and process, and the terms of the buy-ins allowed the fund to manage its illiquid assets without loss of value.
The first buy-in was completed in May 2019 and the second in 2021. This final buy-in was completed in October 2022.
This latest buy-in means the fund is the largest pension scheme in the UK to have insured all its liabilities through a series of buy-ins phased over time.
The trustee was advised on its strategic journey by LCP, which also acted as lead adviser for all transactions. Linklaters provided legal advice to the trustee, and Hymans Robertson is the scheme actuary. PIC was advised by Herbert Smith Freehills.
Graeme Munro, chair of the BAT pension fund, said: “This is another step towards the trustee’s objective of increasing the security of members’ benefits and reducing risk. We have been consistently impressed with PIC’s commitment to excellent customer service ever since the first transaction and this was an important factor in our decision to transact with them again.”
Mitul Magudia, head of business development at PIC, said: “This relationship has been fostered over the last four years, since our initial transaction in May 2019. These three linked transactions have moved the market forward in respect of what is possible in the risk transfer market. We expect the approach taken here to form a template for a number of large schemes currently preparing to move to insurance.”
NEST ends admin contract with Atos
Defined contribution master trust NEST has terminated its administration contract with Atos.
The firm was appointed in February 2021 to design, build and administer a “digital future-focused” scheme.
The new service, which began this year, would focus on making the most of advances in technology and data analytics to deliver personalised and tailored services to each of NEST’s members.
Gavin Perera-Betts, chief customer officer at NEST, said: “We want to thank the team at Atos for all their support and partnership over the past two years. They have been instrumental in helping us transition to becoming a more data-led organisation. They have also helped us crystallise our digital transformation journey, setting us up for a strong future.
“As we start to plan the next phase of our transformation programme, we’re taking some time to review the support we’ll need. The services NEST offers to members will continue to operate as usual.”
Atos’s initial contract was for a minimum of 10 years with an optional extension period of up to five years and the option of an additional period of up to three years for exit.
In a prepared statement, the master trust said that NEST and Atos had finished their active programme of work and that NEST would continue to work with its existing partner TCS while it reviews its longer-term requirements and plans.
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