Lane Clark and Peacock (LCP), the leading actuarial consultancy, has advised Cable & Wireless plc on a bulk annuity insurance contract which transfers exposure to just over £1bn of defined benefit pension liabilities to the Prudential.
Individual members will not see any changes to their benefits, but the risks associated with paying benefits to current pensioners will be borne by the Prudential rather than the Cable & Wireless Superannuation Fund.
Clive Wellsteed, partner at LCP said: “We are pleased to have advised Cable & Wireless in this landmark transaction. It broadly halves the size of Cable & Wireless’ exposure to pension scheme liabilities. This improves security for members and is economically attractive for shareholders.
“Today’s deal is the largest ever and follows a string of such transactions. It is a big vote of confidence in the market for passing pension risk to insurance companies. Earlier this year we predicted £10bn of deals would close in 2008 – the market is well on track for this.
“Looking ahead, the attractive deals are still out there – it’s just the insurance companies have finite capacity to complete transactions.”