British American Tobacco UK Pension Fund secures further £400m buy-in

The British American Tobacco UK Pension Fund has completed a second buy-in with Pension Insurance Corporation (PIC), insuring a further £400m of pension liabilities.

This deal follows an initial buy-in covering £3.4bn of liabilities in May 2019, taking the total pension liabilities insured up to £3.8bn.

The pension scheme has total liabilities of £4.1bn and over 10,000 members.

Three-quarters (75 per cent) of the liabilities insured in the latest deal relate to non-pensioners.

The trustee was advised by LCP who acted as lead transaction adviser.

Linklaters provided legal advice to the trustee and Hymans Robertson is the scheme actuary.

PIC was advised by Herbert Smith Freehills, while Mercer and Travers Smith acted as advisers to British American Tobacco. 

Commenting on the announcement, British American Tobacco UK Pension Fund chairman, Graeme Munro, said: “We are pleased to have secured this second insurance agreement with PIC, which guarantees the pension payments for many more of our members.

“Increasing the security of members’ benefits and reducing risk are top of the trustee’s agenda and this latest transaction is another step towards achieving our aims.

“We have been impressed with PIC’s commitment to excellent customer service since the first transaction and this was an important factor in our decision to transact with them again.

“I would like to thank PIC and our advisers for their collaborative and flexible approach in getting the transaction done in volatile market conditions.”

PIC head of business development, Mitul Magudia, added: “It has been a pleasure working with the trustee and its advisers on securing this deal.

“This transaction underlines the excellent relationship formed between the fund and PIC. This relationship has been fostered over the last two years, with the aid of LCP, since our initial £3.4bn transaction in May 2019.

“We expect to see more schemes in the market complete repeat transactions when pricing objectives have been met.”

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