Pace completes fourth buy-in of 2020 for £350m

The Co-operative Pension Scheme (Pace) has completed its fourth buy-in deal of 2020, securing a £350m deal with Aviva.

This is the scheme’s second buy-in transaction with Aviva this year, after completing a £1bn deal with the insurer in January.

Today's (13 May) buy-in was completing using a pre-agreed ‘umbrella contract’, designed to support a “quick and efficient process”, according to Aviva.

The deal insures the defined benefit pension liabilities of an additional 2,300 Pace members, after the initial Aviva deal covered approximately 7,000 members.

Commenting on the announcement, Aviva director of annuities and equity release, Tom Ground, said: “We are delighted to have completed a second transaction this year with Pace.

"All parties have been closely monitoring pricing, given that current market conditions presented potential opportunities for the scheme.

“The transaction was completed in under two weeks from start to finish, with the existing ‘umbrella contract’ allowing the parties to transact smoothly and quickly.”

Aviva said that members will see no change in their benefit values or the way in which they are paid, with the deal forming part of Pace’s trustee’s de-risking strategy.

Assistance for the trustees in the selection of insurer and the negotiation of terms was led by Aon, while they received legal advice from Linklaters and investment advice from Mercer.

Pace trustee chair, Chris Martin, added: “The trustee board is delighted to have been able to take this further step in enhancing the security of our members’ benefits.

“The ability to transact this quickly and efficiently is testament to all of the hard work from our colleagues in the Co-op Pensions Department in getting Pace to a position where such security enhancing options are possible.”

Aon Risk Settlement Group principal consultant, Tom Scott, said that by leveraging the previous buy-in deal with Aviva, it was “able to capture a short-term pricing opportunity on behalf of the trustee”.

“Swift execution was required in the circumstances, which was made possible by the scheme being well-prepared and having efficient and nimble governance processes in place,” he added.

Pace also completed two buy-in deals with the Pension Insurance Corporation in 2020, one for £1bn and another for £400m.

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