Pinsent Masons advises Scottish Widows on £100m bulk annuity transaction with the Monsanto Pension Plan

This is the first buy-in completed by the Trustee of the Plan and covers c150 pensioners. The sponsoring employer of the Plan is Pharmacia Limited, part of the Pfizer Group.

As part of the structuring of the transaction, the Plan has retained the risk of future deflation. Scottish Widows was able to provide attractive terms, covering the conditions under which the Trustee could secure this risk in the future.

The successful completion of the transaction was a result of Scottish Widows and the Trustee working together to develop and execute a well-defined strategy and transaction timetable at pace. The Trustee was advised by Willis Towers Watson, Aon Hewitt and Slaughter and May. Scottish Widows were advised by Pinsent Masons.

Emma Watkins, Director of Bulk Annuities at Scottish Widows, said: “We are delighted that the Trustee has chosen to insure members’ benefits with us as part of their de-risking plan. The Plan has been innovative in its approach to inflation protection, leading the way for other schemes to secure different benefits with insurers than those that they are obligated to pay to members.

We continue to see strong demand from schemes looking to remove risk through bulk annuities, and we would expect to see a strong pipeline throughout 2017.”

Nita Tinn, Chair of the Trustee of the Monsanto Pension Plan, said “This buy-in is the result of significant work by the Trustee over the last 6 months. The Scottish Widows’ team has offered an attractive deal and has been flexible and responsive to our needs, giving us greater control over which benefits we wish to secure as part of this buy in.

Willis Towers Watson negotiated a price tracking mechanism that directly linked to the assets we were intending to transfer in-specie to Scottish Widows, giving us certainty on the premium up to the point of transacting."

Matt Wiberg, Specialist Bulk Annuity Adviser at Willis Towers Watson, said “The features of this transaction demonstrate the flexibility of the bulk annuity market as it continues to evolve to meet pension funds’ needs.  We were pleased to help the Trustee to purchase a buy-in having negotiated a highly attractive price which generated significant value for the Plan.  The bulk annuity market has experienced a strong start to 2017 with a number of pension schemes seeking to conclude similar deals over the coming months driven by the current favourable market pricing.”