The Cookson Group Pension Plan has signed a second bulk annuity policy with Pension Insurance Corporation which covers a further £30m of liabilities.
The deal, which will insure the pension payments of plan members who retire in each of the next three years, follows the £320m pensioner buy-in announced in July 2012.
The first tranche of members, who will retire between July 2012 and December 2013, will be insured in 2014 based on December 2012 market rates, allowing the fund to minimise volatility. The scheme, now sponsored by Vesuvius plc following the recent demerger of Cookson Group, was advised by Aon Hewitt.
The structure of the transaction is similar in scope to the buy-in policy it put in place with the London Stock Exchange pension scheme in 2011, under which future retirees will be insured automatically over the following five years.
Cookson trustee chairman Allan Course said the locking in pricing for the first tranch of retirees helped remove volatility from the plan.
He added: “We were very pleased with the flexibility and innovation that PIC showed in the completion of the initial pension insurance buy-in. We continue to work closely with Vesuvius to manage a gradual de-risking of the plan and the approach we developed with PIC and our advisors at Aon Hewitt enables us to achieve this.
PIC co-head of business origination Jay Shah (pictured), said: “We are proud to have been able to help the trustee secure the pensions of future retirees, a structure which has worked extremely well for other clients. We believe that by locking into pricing for 2014 today, the trustee has been forward thinking and proactive in managing its pension plan risk.”
Aon Hewitt partner Paul Belok added: “The approach adopted here reflects the trend towards well planned de-risking programmes. Most schemes now are working towards lower risk and insurance is playing an increasing role in this.”
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