Legal & General Group PLC (LSE:LGEN) has signed a £4.8 billion buy-in of the 53,000-member Boots Pension Scheme, making it the UK’s largest-ever transaction of its kind by premium size.
Baker McKenzie advised on the deal, which will see the Boots Pension Scheme’s longevity and investment risk transferred to L&G.
This means that the risk of pensioners living longer than expected, or investments performing poorly, will be borne by L&G rather than Boots.
Boots first began the derisking process of the scheme in 2001, in a wider trend of sponsors moving away from expensive defined benefit pension liabilities.
"We are continuing to see an unprecedented acceleration in demand in this sector, driven by more pension schemes being closer to buyout than ever before,” said L&G’s chief executive Andrew Kail.
Against this backdrop, L&G has posted a record year, with £13.4 billion of global pension risk transfers written to date.
L&G’s solvency ratio is estimated at 224%, giving it significant firepower to pursue investment opportunities.
Sebastian James, senior vice president and managing director of Boots, commented: "We are very pleased to have achieved the gold standard outcome for our pension scheme and to have fully secured the benefits of all members with a highly respected insurer.
“This will provide greater certainty to both the scheme members and to Boots, and is an excellent outcome for both parties."