£1bn deal seals UK’s biggest pension buyout

The UK’s largest ever pension buyout has seen the trustee of the Thorn Pension Fund buy a bulk annuity contract from life insurer Pension Insurance Corporation (PIC) for £1bn.

The deal, brokered by consultancy Mercer, secures the full benefits for more than 15,000 of the fund’s members.

Kevin McLaughlin, risk management adviser to the trustee and a principal at Mercer, said: “We worked with the trustee to review the available options, including investigating investment and longevity hedging products as alternatives to an insured solution in order to secure the best deal for members.

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“Through this buyout, members have obtained additional benefit security and, in due course, will receive an uplift to their existing benefits. It’s a good deal for them. The impact for the trustee is to remove considerable future investment and mortality uncertainty from the fund.”

In May, it was claimed that 10 companies listed on the FTSE 100 were actively considering pension buyouts as the credit crunch made passing off retirement liabilities evermore attractive.