UK roundup: Marie Curie’s bulk annuity deal with L&G

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The defined benefit pension scheme for Marie Curie has agreed to a £30m (€33.2m) full scheme bulk annuity transaction with Legal & General Assurance Society Limited.

The transaction, agreed early in January 2021, secures the benefits of more than 300 retirees and deferred pensioners, it was announced.

The scheme is an existing client of Legal & General Investment Management (LGIM), which has managed a proportion of the scheme’s assets since 2010.

William Medlicott, the scheme’s chair of trustees, said: “We are very pleased to have secured the benefits of our members with Legal & General. The scheme has worked with them over many years and we have found them to be an excellent partner.”

Rachel Cutts, origination & execution director at Legal & General Retirement Institutional, added: “This transaction demonstrates the continued opportunity for pension schemes of all sizes to secure bulk annuity policies and deliver security for their members in these uncertain times. 2020 was a strong year for the pension risk transfer market and this transaction marks the start of another busy year ahead.”

The fund’s trustees were advised on the transaction by Aon and supported by Capita as administrators of the scheme. Legal advice was provided to the trustees by Eversheds Sutherland and Sacker & Partners, and to Legal & General by Clifford Chance.

TPR’s long-term targets will add extra financial pressure to UK plan sponsors, says Aon

Aon has said that The Pensions Regulator’s (TPR) approach to long-term targets, outlined in its newly released interim response to its first DB funding code consultation, will increase the financial pressure on scheme sponsors.

Matthew Arends, partner and head of UK retirement policy at Aon, said: “This is, of course, a very challenging time for many companies and with every possibility that economic conditions may get worse, so for TPR not to recognise the extra financial commitment it is expecting companies to make, will be tough news for many.”

He noted that while it’s positive that TPR is taking on board the comments made by the industry in response to the first consultation, he said he was “disappointed that in its interim response it has not called out one of our key concerns with the first consultation – the additional costs on UK [companies] arising from TPR’s intended approach to long-term targets.”

Arends said that TPR expects all schemes – whether they adopt Fast Track or Bespoke compliance – to reach their long-term target by a fixed date, which will depend on each scheme’s maturity.

“The consequence of this, is that the scheme sponsor will need to make extra contributions if investment underperformance occurs,” he explained, adding that it was a “commitment most sponsors do not currently have”.

He said that “corporate cashflows are finite, so additional cash to meet long-term pension targets means less available to spend on employees and investment in the business”.

This might also mean, he said, less is available for defined contribution savings for employees, as a result of having to support a fixed long-term target date for defined benefit pensions. “Is that inter-generationally responsible?” he asked.