In September 2017, the Smiths Industries Pension Scheme secured a new £207m bulk annuity with Canada Life. As with the scheme's first buy-in with Pension Insurance Corporation (PIC) in 2016, the purchase was well-timed to capture the year's best pricing. The trustees were advised by Aon Hewitt, using its Compass bulk annuity platform.
Across the sponsor's two schemes, Aon Hewitt has now secured seven bulk annuities totalling around £1.5bn as part of a phased de-risking programme. These fund the majority of the schemes' benefits for pensioners.
The latest annuity improved the return on scheme assets while reducing risk. This reflected the recent competitive pressure in the annuity market and the current investment opportunities accessible to insurers. This is the first transaction with Canada Life for Smiths Group, adding to the range of counter-parties used and reflecting Canada Life's development in this market since 2015.
Nicholas Godden, Chair of the Trustee of the Smiths Industries Pension Scheme, said: "This is the first buy-in we have completed with Canada Life as part of our long-term de-risking strategy. We have made considerable strides to completely de-risk the scheme and this remains our long-term aim."
Richard Priestley, Executive Director, Canada Life said: "Working intensively with Aon Hewitt and the Smiths Industries Pension Scheme, we helped deliver, at speed, a competitive price which allowed the scheme to complete the transaction within weeks from selecting their chosen insurer. The deal further cements our progression into medium-sized deals and overall commitment to the bulk annuity market."
Dominic Grimley, Risk Settlement adviser at Aon Hewitt, said: "The Smiths Industries Pension Scheme trustees and manager reacted quickly to market opportunities, allowing us to conclude broking within a few weeks of initial quotations and then to secure terms as favourable as we have seen for some years. Canada Life was able to access attractive assets and reflect them appropriately in their pricing - under time pressure - to deliver the leading bid."
This initiative is part of a wider framework under which the trustee and employer are continuing to work together to support further de-risking, capturing market opportunities and capacity.
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