Retailer Boots has completed a £4.8 billion pensions buy-in.
The transaction with Legal and General will secure the benefits of all 53,000 retirees and deferred members of the scheme. This buy-in begins the conclusion of a de-risking process that the scheme first embarked on in 2001.
Aon acted as the strategic adviser, lead investment adviser and broker for the transaction, representing the trustee. According to Legal and General, this was its largest single transaction by number of members.
Alan Baker, on behalf of Law Debenture, as chair of trustee, Boots Pension Scheme, said: “This agreement with Legal and General gives added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures. We welcome the additional payment from Boots, in addition to the sum it has already committed. As a result, the scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come.”
Sebastian James, senior vice-president and managing director at Boots, added: “We are pleased to have secured the pensions of members of the Boots pension scheme, resulting in an excellent outcome for members and Boots.”
John Baines, partner in the risk settlement team at Aon, said: “A key element in achieving this transaction, was dealing with the significant portfolio of illiquid investments held by the scheme. Working in close partnership with the sponsor and trustees, we applied our experience, innovative solutions and lessons learned from other deals of similar size, ensured this wasn’t a barrier to securing benefits. This, combined with taking action on investments early and having the right investment toolkit, ensured risk was managed effectively, costs were reduced and the transaction completed.”