L&G completes £925m APP de-risking deal with its own scheme

Legal & General (L&G) has completed a £925m Assured Payment Policy (APP) deal with the L&G Group UK Pension and Assurance Fund.

The de-risking transaction secures the cashflows to support benefit payments for approximately 2,000 retired and 2,800 deferred members of the scheme.

The scheme trustee was advised by LCP, Redington and Gowling WLG during the transaction.

This is L&G’s third and largest APP deal to date, having previously completed a £250m APP deal as part of a £1.1bn de-risking transaction with the AIB Group UK Pension Scheme and a £400m APP deal with its L&G UK Senior Pension Scheme.

L&G’s APP de-risking solution enables a pension scheme 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.

Commenting on the announcement, Independent Trustee Services managing director and L&G Group UK Pension and Assurance Fund chair of the trustee, Chris Martin, said: "The APP is a very significant event in the fund's lifetime as we move closer to securing our members' benefits.

“This is a unique product that removes a large proportion of the investment risk from the fund. We were very grateful to our advisers LCP, Gowling WLG and Redington for their guidance and support through this transaction."

L&G Retirement Institutional CEO, Laura Mason, added: “We are delighted to have provided increased certainty for the pension fund’s members with this transaction and are grateful for the proactive, collaborative approach taken by the trustees and their advisers to deliver a smooth transaction.

“This transaction is further demonstration of our ability to deliver innovative, trusted solutions to meet the evolving needs of our clients. With three APPs now transacted and a partial conversion already completed, I’m excited to see real momentum growing with this solution. There is clear demand in the de-risking market for innovation and L&G want to be at the forefront of that.”

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