BHS pension scheme agrees £800m buyout

The BHS2 Pension Scheme has completed an £800m buyout with Pension Insurance Corporation, securing its 9,000 members’ pension benefits in full.

According to PIC, the deal was secured “sooner than anticipated” after trustees and advisers “took advantage of an attractive opportunity” to implement the bulk annuity.

The BHS2 Scheme, which covers the members of two predecessor schemes, was set up in 2017 following the collapse of BHS and a subsequent £363m cash injection from Sir Philip Green.

Independent Trustee Services executive chairman, Chris Martin, said: “It has always been our goal to deliver the best possible outcome for the members of this scheme. A buyout guarantees member benefits under the BHS2 Scheme, and is the most secure solution for the members of this scheme.”

The deal does not include members who transferred into the Pension Protection Fund of some members who took a lump sum in lieu of their pension. As part of the deal members will become PIC policyholders.

Barnett Waddingham partner and scheme actuary, Ben Pullen, said: “An attractive pricing opportunity existed in the bulk annuity market, and so we proactively assisted the trustee to take advantage of the opportunity to insure member benefits. Reaching this outcome for the BHS2 Scheme so early is a testament to the combined efforts of all parties involved.”

Eversheds Sutherland, Willis Towers Watson and Barnett Waddingham all advised on the transaction.

The deal was the second buyout completed by PIC in the space of a week, after it secured Section B of the Menzies Pension Fund for £75m.

The scheme, which has insufficient assets to buyout all benefits in full will meet the shortfall “through a number of future fixed instalments”, allowing them to lock in the attractive pricing seen in the first half of 2018.

Furthermore, the buyout locks in the sponsor’s contribution requirements after it emerged that John Menzies entered an agreement to sell Menzies Distribution Limited to Endless LLP.

Menzies Pension Fund chairman of trustees, Ian Percy CBE, said: “The Trustees are delighted to have secured this attractive policy with PIC, locking down risk in the Scheme far earlier and for a lower cost than expected and significantly improving security for our members.”

Hymans Robertson acted as the lead advisor on the transaction

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