The Allied Domecq Pension Fund completes a £3.8bn buy-in with Rothesay Life
27 Sep 2019
The Allied Domecq Pension Fund (the “Fund”), sponsored by Allied Domecq (Holdings) Limited, part of the Pernod Ricard Group, has completed a £3.8bn buy-in with Rothesay Life covering the Fund’s liabilities in respect of c.27,000 members.
Hymans Robertson were appointed as lead adviser on the buy-in following a competitive tender, with legal advice provided by DLA Piper.
The buy-in covers the liabilities of over c.17,000 pensioners and c.10,000 deferred pensioners and is the largest ever buy-in to include deferred members. The Fund will retain assets to cover ongoing expenses and liabilities not covered by the buy-in.
The Fund’s buy-in brings the total volume of pension buy-in and buy-outs announced in 2019 to £30.6bn, already surpassing 2018’s then-record volume of £24.2bn.
Lisa Arnold, the Fund’s Chairman of Trustees commented: “This buy-in is a key step on a long journey of de-risking taken by the Fund, with strong support along the way from the sponsoring company. It represents a major achievement, improving security for all our members. Hymans Robertson’s insights and experience helped the Fund to navigate a fast-moving bulk annuity market and secure excellent terms with Rothesay Life.”
Michael Abramson, Partner at Hymans Robertson and lead adviser on the transaction added: “Hymans Robertson is delighted to have helped the Trustee take this substantial step in improving member security. We worked closely with the Fund to clearly define and achieve its objectives, ultimately helping the Fund to navigate a busy bulk annuity market and lock down terms for £3.7bn of liabilities with Rothesay Life. As the largest buy-in to date covering deferred members, this paves the way for other large schemes to de-risk.
”This transaction takes the volume of bulk annuities announced so far in 2019 to over £30bn, compared with 2018’s then-record volume of £24bn for the full year. Despite low interest rates, there remains strong demand for bulk annuities from pension schemes. We expect to see further large transactions announced in 2019 and already see a strong pipeline for 2020.”
Sammy Cooper-Smith, co-head of business development at Rothesay Life said: “We are grateful to both the Trustees of the Allied Domecq Pension Fund and Hymans Robertson for their commitment to the project, together we were able to execute this transaction smoothly and well ahead of schedule. The Fund came to market with clear, well thought through objectives which allowed us to focus on providing tailored solutions for their key requirements.
“This transaction is further evidence that large maturing pension schemes are increasingly looking to secure de-risking opportunities, and Rothesay Life remains well-placed to insure these liabilities as the UK’s largest specialist annuity provider.”
Cédric Ramat, EVP Human Resources, Sustainability and Responsibility at Pernod Ricard said: “Pernod Ricard is very pleased that the Trustee of the Allied Domecq Pension Fund has been able to conclude this buy-in with Rothesay Life. This transaction reduces the Group’s exposure to long-term risks associated with the Fund and is a significant milestone in the journey to secure the benefits earned by the Group's employees and former employees as members of the Allied Domecq Pension Fund.”