The transaction has been structured under an umbrella contract to facilitate potential future transactions between Phoenix and the Scheme, which will allow the parties to move quickly to take advantage of future market opportunities that may present themselves.
The Trustee was advised by Lane Clark & Peacock (LCP), the lead adviser for the transaction, and Linklaters on legal matters. Phoenix was advised by CMS.
Graham Oakley, Chairman of the Marks and Spencer Pension Trust, said “The Scheme’s strong funding position has allowed the Trustee to follow a strategy of reducing risk by aligning investments more closely with the pension benefits we will need to pay to members. This bulk purchase annuity is a significant step in reducing longevity risk being managed by the Trustee, providing additional security for all members’ benefits”.
Justin Grainger, Phoenix Group’s Head of Bulk Purchase Annuities said, “We are delighted to have been selected by the Trustee of the Marks and Spencer Pension Scheme for our first BPA transaction. We announced our intention to enter this market in 2017 as it offers an additional and complementary source of growth for Phoenix. We look forward to building our relationship further with Marks and Spencer and helping protect the security of their members’ benefits. This is a growing marketplace and, as this transaction demonstrates, we are well-placed to offer attractive solutions to other defined benefit pension schemes”.
Phoenix believes that the BPA market offers a complementary source of growth which it will pursue alongside its primary strategy of closed life consolidation. It will only proceed with proportionate transactions which meet its stated acquisition criteria and are funded through existing resources.
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