Marks and Spencer completes pensioner buy-in transactions equating to £1.4bn

Marks and Spencer

Retail organisation Marks and Spencer has completed two pensioner buy-in transactions for its defined benefit (DB) pension scheme, totalling approximately £1.4 billion.

The buy-in policies have been completed with insurance organisations Phoenix Life and the Pension Insurance Corporation (PIC) as part of the scheme’s long-term de-risking strategy. This approach aims to reduce the risk that Marks and Spencer will be required to contribute additional cash into the DB scheme, which is valued at around £10 billion.

The organisation is also striving to secure all DB pension scheme members’ benefits as part of this strategy, as well as minimise the risk to shareholders.

Graham Oakley, chair at Marks and Spencer Pension Trust, said: “We’re pleased to announce the purchase of these additional buy-in policies, which provide an important contribution to the trustees’ ongoing objective of reducing the longevity risk in the scheme to increase the security of all members’ pensions. A collaborative approach with the [organisation], together with efficient and effective advice, continues to deliver well-executed and well-priced transactions.”

These transactions follow two buy-in policies that were purchased in 2018; around two-thirds of the scheme’s pensioner liabilities are now insured.

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Marks and Spencer has been working with independent actuarial firm Hymans Robertson to develop its strategy.

Richard Wellard, partner at Hymans Robertson, added: “This will undoubtedly be one of many large buy-in transactions to complete this year. Setting a strategy and timing transactions in a way that works for both the [organisation] and the trustee is very important. Shared objectives, a collaborative approach and continual communication are so important in the de-risking of large pension schemes. This is a marathon, not a sprint.”