Confectionery organisation Cadbury UK has completed a pensioner buy-in transaction for its defined benefit (DB) pension scheme, totalling £520 million.
The transaction, completed with Rothesay Life, insures the pension liabilities for approximately 1,900 pensioner members of the Cadbury Mondelez Pension Fund; the bulk annuity will be held as an asset of the scheme while premiums, which have been paid in gilts and cash, will be reinvested as part of Rothesay’s Life low-risk, long-term investment strategy.
This is the second buy-in agreement completed by Cadbury UK, following a £500 million buy-in transaction that occurred in 2009. These aim to de-risk the DB pension scheme, with 20% of the Cadbury Mondelez Pension Fund’s £4.6 billion total liabilities now insured.
The pension scheme trustees were advised by professional services organisation Aon and law firm Pinsent Masons, while Rothesay Life was advised by Gowling WLG.
Greg Chick, chairman of the trustees of the Cadbury Mondelez Pension Fund, said: “We’re pleased to announce the next step in a long-term de-risking strategy with the purchase of a buy-in policy with Rothesay Life, which provides an important contribution to the trustees’ ongoing objective of reducing risk in the scheme and to increase the security for all members of the fund.
“This is a significant step to de-risk the scheme and our aim is to continue to do so in the future with good partners like Rothesay Life and Aon.”