AIB Pension Scheme completes £1.1bn de-risking deal with L&G

The AIB Group UK Pension Scheme has completed a £1.1bn de-risking transaction with Legal & General (L&G), protecting the benefits of over 1,300 members.

This transaction, which was completed at the end of 2019, is split between a £850m pensioner buy-in and a £250m Assured Payment Policy (APP).

The deal is the first instance of L&G’s APP solution, which allows pension schemes to partner with an insurer on the way to buy-in and selectively insure some of the pension risks associated with their scheme members.

L&G said the product locks down investment risk by providing protection against changes in asset yields, interest rates and inflation.

The trustee was advised on the transaction by Mercer and Sackers, the bank was advised on the transaction by Mercer, PWC and CMS, while legal advice was provided to L&G by Clifford Chance.

AIB Group UK Pension Scheme trustee chairman, Norbert Bannon, said: “This transaction is another major milestone in de-risking the scheme. It is the result of a collaborative process between the bank and trustee over many years, always with the clear objective of improving the security of members’ benefits.

“This would not have been possible without the constructive input and advice of our advisers. The trustee is appreciative of the cooperation and support it received from the bank over the years.”

L&G Retirement Institutional (LGRI) CEO, Laura Mason, said L&G was "pleased" to have been able to help the scheme on its de-risking journey and "proud to showcase" the new APP solution, adding that the solution’s “structure was ideal for what the scheme and AIB were working to achieve”.

Mercer risk transfer team partner and adviser to the bank, Suthan Rajagopalan, said: “We are delighted to have partnered with AIB in reviewing the whole bulk annuity market and to have worked closely with LGAS to successfully structure a de-risking solution that met the bank’s needs.

“Through collaboration with the trustee a flexible and efficient progression to full buy-in was defined with LGAS for the longer-term benefit of members. The transaction includes the transfer of the scheme’s existing pensioner longevity swap which is a growing trend in the UK.”

    Share Story:

Recent Stories

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

Bulk annuities during coronavirus
Laura Blows speaks to Just business development manager Prash Mehta about the impact of coronavirus on transactions