National Grid pension scheme completes £800m buy-in with Rothesay

The National Grid UK Pension Scheme has completed a £800m buy-in transaction with Rothesay, covering the benefits for Section A members of the scheme.

This is the second bulk annuity deal the scheme has completed with Rothesay, following a £2.8bn buy-in with the insurer in 2019, with a total of £3.6bn of de-risked liabilities now with Rothesay.

It also follows a £1.6bn buy-in with Legal & General in 2019, which covered around 6,000 members of section B of the National Grid scheme.

The transaction was triggered after market pricing and scheme funding aligned for this particular tranche of liabilities, and was made possible thanks to the monitoring framework put in place by the scheme after the previous transaction.

It will provide the scheme with greater certainty around the impact of changes in life expectancies and removes future risk, with the overall aim of protecting the scheme’s future funding.

National Grid group head of pensions, Eddie Hodgart, highlighted the transaction as "another important step" in the scheme's de-risking journey, emphasising that this remains a priority for National Grid.

Adding to this, National Grid UK Pension Scheme CEO, Chris Hogg, said: “We are pleased that we could work with Rothesay and National Grid again to put in place a buy-in which is good for members and will provide long-term security for their pensions.

“ESG and climate change is of paramount importance to the trustee and is an important factor in our decision making process.

“We look forward to working with Rothesay who share our commitment to achieving net zero and supporting international agreements to limit future temperature increases to 1.5°C.”

Indeed, the National Grid UK Pension Scheme announced earlier this year that it had agreed a UK corporate pension mandate with Octopus Renewables to invest £185m in British solar and onshore wind assets.

Rothesay head of business development, Sammy Cooper-Smith, added: “As a company purpose built to protect pensions, we work hard to serve our clients and deliver innovative new approaches to support schemes and their members.

“This is reflected in the system we put in place with Aon and the scheme which ensured this transaction was ready to proceed as soon as markets allowed.”

This sentiment was echoed by Aon partner, Mike Edwards, who highlighted the transaction as demonstration of the benefits of having a clear strategy and framework for monitoring.

"The future-proofed umbrella contract terms, established with Rothesay in the scheme’s previous £2.8bn buy-in, also enabled efficient execution of this transaction," he added.

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