The Trustees of the Yorkshire Building Society Pension Scheme has purchased a £245m pensioner buy-in policy with Pension Insurance Corporation, a PRA-regulated life insurer. The insurance policy covers around a half of the Scheme’s pensioner liabilities at November 2018.
LCP led the advice to the Trustee in preparing for the transaction and negotiating the price and terms of the buy-in. DLA Piper provided legal advice to the Trustee in preparing for and executing the transactions.
The Scheme’s strong funding position has allowed the Trustee, working in collaboration with its sponsoring employer, the Yorkshire Building Society to steadily de-risk its overall investment strategy into assets and hedging instruments that more closely match the pension payments due to its members. The purchase of a buy-in has allowed the Scheme to match benefit cash flows and remove longevity risk for a portion of the pensioner population within the security of regulated insurance policies, all at an attractive price.
David Paige, Chair of Trustees of the Yorkshire Building Society Pension Scheme commented: “We are delighted to have secured this insurance policy covering liabilities owed to a significant portion of our members. We were able to do so at an attractive price and on favourable terms through a process led by LCP and DLA Piper and supported by the Scheme Actuary and investment advisers, Willis Towers Watson.”
Alasdair Lenman, Chief Finance Officer of the Yorkshire Building Society commented: “We support the Trustees’ purchase of this buy-in policy as a significant step in de-risking the pension scheme for the benefit of both its members and the Society. By working collaboratively, the Society and Trustees were able to execute the optimal size of transaction from both the perspective of risk reduction in the pension scheme and capital efficiency.”
Myles Pink, partner at LCP, said: “We are delighted to have advised on this transaction at a time when pricing is favourable in the insurance de-risking market. The Yorkshire Building Society Pension Scheme has been able to pick up the longevity risk removal, cash flow matching and other protections brought through the buy-in at a price that improves the overall yield in its asset portfolio.”