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L&G secures record-breaking £2.5bn pension buyout

Legal & General has completed a £2.5bn partial buyout of car safety firm TRW’s defined benefit pension scheme.

The deal, the largest transaction of its type in the UK, means the pension liabilities of 22,000 members of the TRW pension scheme have transferred to L&G.

As part of the process around 5,500 members accepted a pension increase exchange offer, meaning they will receive a higher flat rate pension but give up the right to future increases in payments.

Earlier this year, the insurer secured a £3bn buy-in deal with the same scheme. In a buy-in the liabilities remain the responsibility of the scheme, whereas a buyout transfers the risk entirely off the company’s balance sheet.

L&G Retirement managing director Kerrigan Procter says: “2014 has been a landmark year in the pension de-risking market with both the largest buy-in and the largest buyout in the UK – both arranged with Legal & General. These arrangements demonstrate the breadth and depth of tailored pension de-risking solutions that Legal & General offers.”

Chair of the TRW pension scheme’s trustee board Neil Marchuk says: “This buyout with Legal & General materially de-risks our remaining pension obligations and provides security to members who are insured.”

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