Banking group Deutsche Bank has completed a £400 million bulk purchase annuity buy-in transaction for its UK pension scheme.
Aviva insured the defined benefit (DB) pension liabilities for nearly 1,300 scheme members, removing the investment and longevity risk. As a result of the deal, they will experience no change in the amount of benefits they receive or the way in which they are paid.
According to the bank, this tranche of the scheme's liabilities was completed using an umbrella contract, providing a basis for future transactions. Trustees were independently advised by law firms Lane Clark and Peacock (LCP) and CMS Cameron McKenna Nabarro Olswang.
Jeremy Sowden, head of pensions and benefits UK and Ireland at Deutsche Bank, said: “This latest transaction enables Deutsche Bank to hedge a material portion of the liabilities of scheme, with the majority of pensions currently in payment now insured. It is another step on our ongoing journey to reduce risk in relation to our defined benefit pension obligations, benefitting the scheme members, the trustee board and the bank.
“We were able to do so on mutually attractive terms, including comprehensive residual risks cover that further helps the bank manage its risk exposure. We will continue to work closely with the trustee board to evaluate future de-risking opportunities.”
Michael Wrobel, chair of the trustee board at Deutsche Bank’s UK pension scheme, added: “It is another significant step on our de-risking journey and the excellent outcome with Aviva reflects the expertise and collaborative approach of our advisers and our close working relationship with the bank. The extensive work the trustee, bank and our advisers have undertaken to date means the scheme is well positioned to take advantage of future opportunities to further de-risk as they arise.”
David Fink, partner at LCP, said: “We have worked closely with the trustee and Deutsche Bank over a number of years to develop a phased buy-in strategy to reduce the scheme’s risks over time. This further transaction gives the scheme a strong platform to implement its strategy in what could be a very busy market over the next few years.”
