IMI deferred fund agrees £250m partial buy-in with PIC

The IMI 2014 Deferred Fund has agreed a £250m partial buy-in with the Pension Insurance Corporation (PIC), covering £250m of liabilities for around 1,200 fund members, 95 per cent of which are deferred.

PwC acted as lead transaction adviser for both the employer and the scheme, although the scheme also received actuarial advice from WTW, investment advice from Aon, and legal advice from Squire Patton Boggs.

IMI has now insured around £800m in sponsored liabilities with PIC since 2016, having completed five previous partial buy-in transactions with the insurer.

IMI group pensions manager and secretary to the trustee of the fund, Duncan Brown, also highlighted the transaction as a “huge step in the direction of our long-term de-risking objective of fully insuring our pension obligations”.

He stated: “We have now insured close to 80 per cent of our UK defined benefit pension obligations over the last decade, securing the benefits for our members and substantially eliminating uncertainty around costs and cash for IMI plc as corporate sponsor of these obligations.

“We’re delighted that we have been able to complete another transaction with PIC, who have once again been flexible and innovative in their approach. We have consistently been impressed with PIC’s focus on customer service.”

PIC head of pricing, Tristan Walker-Buckton, commented: “IMI is a client that we have worked very closely with over several years and we are naturally proud to have been able to complete this transaction with them.

“A key aspect of this transaction is the very high proportion of deferred members and insuring them required close collaboration with the trustee. IMI are a very good example of how a first-class de-risking exercise should be run and the trustee should be congratulated on the execution of their plan.”

Adding to this, PwC pension solutions advisor, Swapnil Katkar, said: “We were pleased to be able to support IMI plc and the trustee in structuring and executing this de-risking transaction despite the disruptions of the pandemic.

“Even though the insured liabilities were almost entirely made up of deferred members which
are typically more challenging to insure, and long dated corporate credit spreads in the market were at historically low levels, we were able to work with PIC and other participating bulk insurance providers to ensure competitive pricing and suitable terms could be incorporated in the transaction.”

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