Aviva has secured a buy-in arrangement with the Interserve Pension Scheme covering £300 million of pensioner liabilities, following a competitive tender process.
The Trustee of the Interserve Pension Scheme was advised by LCP as lead adviser, with Sacker & Partners providing the legal advice.
The buy-in will help Interserve, the UK-based international support services and construction group, reduce its pension scheme risk by protecting around 35 per cent of the Scheme’s liabilities from fluctuating interest rates, inflation and mortality risk. The size of this buy-in puts it in the top 20 of publically announced transactions completed over the last five years.
Aviva worked closely with the Trustee and its advisers to agree a flexible and practical solution in just four months, highlighting how efficient transactions such as this can be when all parties commit to pre-determined timescales.
David Trapnell, Chairman of the Trustee Board, said:
“This transaction represents a significant risk reduction step for the Interserve Pension Scheme, reducing funding volatility and providing additional protection for all our members’ benefits.”
Nick Johnson, Aviva’s Director of Bulk Purchase Annuities, said:
“Aviva has worked particularly closely with the Trustee and its advisers, focusing as a team on an efficient way to complete the transaction and providing Interserve with an effective way of managing its pension scheme risk. We are increasingly seeing mid-size BPA transactions being dealt with in a streamlined way, similar to smaller deals, and this calls on Aviva’s specific expertise in the market.”
Emma Watkins, Partner at LCP, said:
“The Trustee and sponsor, Interserve plc, worked closely together to successfully deliver the objective of reducing the level of risk associated with the existing pension promise. Implementing this long term investment decision using a tried and tested buy-in process allowed competitive terms and pricing to be secured within four months of formally approaching the insurance market.”
Stuart O’Brien, Partner at Sacker & Partners, said:
“The contract provided a good de-risking opportunity for the pension scheme and it includes some useful flexibilities which are beneficial to the Trustee. Sackers is pleased that the transaction proceeded efficiently and in line with a tight project plan thanks to the collaborative approach of all parties.”
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