The BBA Pension Trustees, with the support of its sponsor, BBA Aviation, has agreed to insure its pensions in payment with Legal & General.
The transaction involves over £270m of assets being transferred to Legal & General in return for which Legal & General will make the regular annuity payments to the Scheme for its existing 5,900 pensioners.
The annuity purchase is an investment by BBA Pension Scheme involving approximately 60% of its assets.
Current and future Scheme pensioners will see no change in their benefits or the way in which they are paid.
In addition, the BBA Pension Scheme has agreed terms for Legal & General to insure liabilities in respect of Scheme members who retire over the next two years.
Simon Gadd, Managing Director, Legal & General’s Annuities Business, said:
“We are delighted the BBA Pension Scheme, and its sponsor the FTSE250 quoted BBA Aviation, have chosen Legal & General to insure part of their pension scheme. Our ability to offer a bespoke solution to meet the requirements of the Scheme, backed up by our financial security and extensive track record, were key to winning this arrangement.”
“This deal reflects the current growing interest by trustees of schemes of all sizes in mitigating the risks in running their pension scheme. The phased transfer of the risks over a period of time is proving a particularly popular approach, as it allows Trustees to continue to run the scheme, while a risk mitigation programme is implemented.”
“We look forward to providing continued support to the BBA Pension Scheme in the future.”
Andrew Wood, Group Finance Director, BBA Aviation, said:
“This investment decision marks an important step forward for the BBA Pension Scheme. Current and future pensioners will see no change in the amount of benefit they receive or the way in which it is paid. But by swapping assets in the scheme for an annuity provided by Legal & General, we can de-risk the scheme and so provide greater stability and certainty in funding for the benefit of all members. We look forward to working with Legal & General.”
The BBA Pension Scheme was advised on this purchase by Hewitt, Hymans Robertson and Hammonds.