Hitachi Data Systems completes bulk annuity with L&G

Hitachi Data Systems has completed a bulk annuity with Legal and General (L&G) for an undisclosed amount.

L&G revealed today, 14 August, that the transaction was completed in the first half of 2019, for the Hitachi Data Systems Retirement Benefits Plan, which covers around 120 members.

This is the third transaction between L&G and the plan, with L&G having completed two prior pensioner only buy-ins in 2012 and 2013. This latest transaction provides insurance cover for all the remaining members of the plan: both those who have retired since 2013 and the deferred pensioners.

L&G said the transaction required an “innovative” approach to align with the plan’s construct and provisions for members’ benefits. The plan is unusual insofar as each member’s pension is based on the higher of their earnings related defined benefit (DB) pension and their defined contribution (DC) account over their active service period.

Working with the trustees and their advisers, L&G found a solution that allowed the trustees to ensure the members continue to receive a pension based on the higher of the DB and DC benefit calculation until the plan is wound up and bought out.

This solution was agreed ahead of transacting, ensuring that the deferred pensioner members have suitable time to consider their options before a bulk crystallisation event occurs at buyout.

The trustees were advised by Willis Towers Watson providing actuarial and consulting advice and gunnercooke providing legal advice. CMS provided legal advice to L&G.

Commenting, Sefton Truste Park Company chair, Neville Byford, which is trustee of the plan, said: “We are pleased to have taken this latest important step in our de-risking journey. All parties worked together to find a solution which meets the objectives of the Trustee and Plan sponsor whilst protecting the security of members’ benefits.”

L&G Pension Risk Transfer director, Frankie Borrell, added: “We are delighted to have helped Hitachi and the Trustee over the past seven years. This is another great example of a group of trustees and their sponsor having the confidence and trust to start and finish their de-risking journey with us.

The dual benefit dynamic presented some interesting challenges for the transaction, but all parties showed great focus on delivering an outcome that had members’ interests at the heart.”

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