M&S Pension Scheme completes 2 further buy-ins totalling £750m

The Marks & Spencer (M&S) Pension Scheme has secured two further buy-in policies with Phoenix Group and Aviva, worth a total of around £750m.

These are the most recent in a series of bulk annuity deals carried out under the previous umbrella contracts with the insurers.

The M&S Pension Scheme secured four policies in 2018 and 2019, with Phoenix, Aviva, and Pension Insurance Corporation.

The combined buy-in policies of all transactions to date total around £3.7bn and 80 per cent of the scheme’s pensioner liabilities are now insured.

The deal with Phoenix is the third with the insurer and is worth around £360m, bringing the total liabilities covered by Phoenix to £1.3bn.

Hymans Robertson worked with M&S on the de-risking for the scheme, while the trustees were advised by LCP and legal advice was provided by Linklaters.

“We’re pleased to announce the purchase of these additional buy-in policies, providing another important contribution to our ongoing objective of reducing risk in the scheme to increase the security of all members’ pensions,” commented M&S Pension Trust chair, Graham Oakley.

“The collaborative approach and our existing relationships have allowed us to act quickly and complete further well-priced transactions.”

Phoenix Group head of bulk purchase annuities, Justin Grainger, added: “We are delighted to continue to support the Marks and Spencer Pension Scheme on its long term de-risking journey.

“This latest transaction demonstrates how an umbrella contract structure can benefit all parties if trustees are set up to react to favourable pricing opportunities.”

M&S also published its half-year report today (4 November), which revealed that its pension surplus had declined by £1.1bn between the end of March and 26 September 2020, to £890m.

It noted that the surplus had increased significantly as at the end of March due to unusually high credit spreads due to the impact of Covid-19 and, during the half year period, credit spreads reverted to more normalised levels, giving rise to the decrease in the surplus.

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