Qinetiq and Peugeot pension schemes complete buy-ins with Scottish Widows

The trustees of both the Qinetiq Pension Scheme and the Peugeot Advanced Pension Plan have completed bulk annuity buy-ins with Scottish Widows.

Qinetiq agreed its first bulk annuity insurance buy-in for approximately £690m, covering 33 per cent of the schemes liabilities.

As a result of the transaction, the accounting pension surplus recorded on Qinetiq’s balance sheet will reduce by an estimated £120m with no related cash impact.

The deal is in line with the company’s strategy of de-risking the pension liabilities.

LCP acted as lead adviser on the transaction, while legal advice was provided to the scheme by Gowling WLG and to Scottish Widows by CMS.

Best Trustees director and Qinetiq Pension Scheme chairman, Huw Evans, commented: "This buy-in improves the risk profile and investment efficiency of the Scheme for all members and represents a significant step towards securing the benefits promised.

Scottish Widow’s transaction with Peugeot covers all members of its scheme and has secured the benefits of all scheme members for £140m.

It has minimised the overall funding required to the plan, which is operated by parent company Groupe PSA, whilst providing full coverage of its benefits.

Willis Towers Watson was the lead advisor to the Trustee on the transaction, alongside Gowling WLG (UK) LLP and Aon, with Natixis and Sackers advising the company.

Scottish Widows was advised by Herbert Smith Freehills.

Commenting on the announcement, Peugeot Advanced Pension Plan trustee director, Geoff Benney, said: “This full buy-in is the culmination of many years’ work by the trustee to de-risk the plan.

“Scottish Widows presented an attractive deal which provides comfort to the Trustee in regard to the security of members’ benefits and certainty of overall cost.”

Natixis head of pension advisory, Richard Ratcliffe, added: “We have been working with Groupe PSA to build support for a transaction.

“Ultimately, a collaborative approach with the trustee and their advisers helped to achieve a deal structured in such a way that provides certainty for the company and minimises the overall funding required through to the end of the process.”

Willis Towers Watson also said that good quality data and extensive due diligence completed upfront “ensured certainty of cost to the trustee ahead of entering into the contract”.

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