The transaction includes a significant proportion of non-UK overseas lives and will protect the Scheme from the risk of rising costs as a result of pensioner and dependent members living longer than expected.
CMS was appointed by the Scheme as legal counsel for this specific project following a competitive tender process and worked closely together with Hymans Robertson, the lead adviser to the Scheme. In a market first, the transaction optimised efficiencies for the Scheme through a combination of the following:
• allowing the Scheme to have exposure to Hannover Re’s credit risk;
• allowing the Scheme to benefit from Zurich retaining a substantive minority share of the longevity risk (in a product known as “Enhanced Pass Through”); and
• providing the Scheme the benefits of transacting with a UK regulated insurance company.
The CMS team was led by Pensions Partner, James Parker, with assistance from Maria Rodia, Alex Tomlinson and Laura Clarke.
Commenting on the transaction, James Parker said: “We are delighted to have been able to assist the trustees to significantly reduce the longevity risk in their scheme and improve the security of members’ benefits. This is one of a series of high-profile transactions on which we have acted as transaction legal counsel this year, underlining CMS’ market-leading reputation in the pensions de-risking market.”
This transaction concludes a busy year for the CMS Pensions Team with highlight transactions including acting for Stanhope Pension Trust, trustee of the GEC 1972 Plan, on a £4.7 billion buy-out transaction with Rothesay Life – the UK’s biggest ever pension transfer deal.
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