BHS secures £2.5m bulk annuity with L&G

The trustee of the BHS Senior Management Scheme has agreed a £2.5m bulk annuity deal with Legal & General (L&G), securing benefits above the level of Pension Protection Fund (PPF) compensation.

BHS previously entered administration in April 2016, resulting in a Pension Protection Fund assessment period, and a 'years long' saga for the company's pension schemes.

However, this transaction has allowed the scheme to exit the PPF’s assessment period securing benefits in excess of those payable for the PPF.

It will also provide additional certainty for the scheme’s remaining members, with all members becoming L&G policyholders.

Commenting on the deal, Independent Trustee Services, chair of the trustee, Chris Martin, stated: “We’re very pleased to have achieved a good outcome for members.

“This was made possible by proactive trusteeship in managing the assets, monitoring the funding level and taking advantage of attractive pricing in the bulk annuity market.

“Despite its small size, the transaction was particularly innovative, and I would like to thank L&G for their support.

“I’d also like to thank our co trustees along with our advisers, Willis Towers Watson, Eversheds Sutherland and Barnett Waddingham, for their help through the whole process.”

L&G Retirement Institutional, origination and execution director, Aysha Patel, also highlighted the transaction as demonstration of how pension schemes at the smaller end of the market can be supported to deliver beneficial outcomes and enable them to exit the PPF.

This was echoed by Willis Towers Watson adviser to the trustee, Rhys Mellens, who added: “This transaction goes to show that, by running a well organised process and being ready and flexible to transact at the optimal time, pension schemes can achieve great pricing in the risk transfer market no matter the size of the deal.”

The deal also follows the recent Old British Steel Pension Scheme £2bn buy-in, which again allowed the scheme to exit the PPF after securing payments at or in excess of PPF levels.

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