Legal & General has entered into a “buy-in” agreement with the Trustees of the Kenwood Pension Scheme to insure the remaining UK defined benefit pension liabilities, covering mainly members yet to retire from the Scheme.
The transaction incorporates a deferred premium facility, which means that the covered members' benefits are fully insured from the point of signing but part of the full premium will be payable over a number of years in a way that suits the sponsoring employer, Kenwood Appliances Ltd. Kenwood is the manufacturer of the famous Kenwood Chef and the company is part of the DeLonghi Group.
Tom Ground, Head of Bulk Annuities, Legal & General, said: "We are pleased to have worked with the Trustees, their advisers and the Company to design a bespoke premium payment structure for this transaction. We expect that this approach to financing transactions will become increasingly popular as it allows volatility and risk to be removed immediately whilst also providing greater certainty over future contribution requirements for companies."
The Trustees were advised by Capita Employee Benefits ("Capita") and their legal advisers Burges Salmon.
Francis Fernandes, Senior Adviser, Capita said: "This transaction has allowed the Kenwood Trustees to take another big step to fully secure members' DB benefits in a way that meets both Trustee and Company objectives. Legal & General was prepared to spread the cost of the premium in a way that suited Kenwood and enabled insurance from day one without the Trustees running further investment risk."
Catrin Young, Senior Associate, Burges Salmon said:
“This was an interesting project to work on which involved the negotiation of non-standard wording to cover the deferred premium facility. This potentially paves the way for other trustee boards and companies to agree similar arrangements”.
Tom Ground concluded: "Legal & General is delighted to offer this deferred premium facility now and, as a result, help other trustees and companies achieve their de-risking aims.”
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