Cookson Group has entered into a pension insurance buy-in agreement with Pension Insurance Corporation (PIC).
The transaction covers the material science firm’s pensioner liabilities totalling around 60% of the total liabilities, with an insurance premium of around £320 million from existing assets of the defined benefit (DB) pension scheme.
The buy-in agreement was completed with advice from Aon Hewitt.
Mike Butterworth, group finance director at Cookson Group, said: “Following the successful conclusion of an enhanced transfer value (ETV) offer earlier this year, which significantly reduced the plan’s deferred member liabilities, this buy-in represents a further demonstration of the organisation’s intention to work with the trustee to de-risk the plan in a managed way.”
Allan Course, chairman of the trustee, said: “The buy-in means that the plan is now fully protected against interest rate, inflation and longevity risks in relation to a significant proportion of its liabilities. This provides an additional level of security for members.”
Jay Shah, co-head of business origination at the PIC, added: “While pension scheme funding levels have generally been impacted by poor equity markets and low interest rates, the large number of pensioner buy-ins completed recently have been driven by the increase in value of gilts and bonds, allowing those schemes whose liabilities are at least partly matched with these assets to insure significant levels of risk.
“This allows Cookson Group and their shareholders to lower their exposure to future pension scheme funding volatility.”
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