Setting a new record in the
UK’s defined pension scheme buyout market Legal & General
(L&G) has entered into a bulk annuity contract with the
trustees of the Turner & Newall (T&N) Retirements Benefit
Scheme, Alexander Forbes Trustee Services, worth £1.1bn
($1.75bn).
The buyout deal just breaks
the previous record set in December 2008 by Pension Insurance
Corporation’s £1.1bn buyout of the Thorn pension scheme.
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The T&N pension scheme
has been under assessment by the Pension Protection Fund (PPF)
since 2006.
L&G noted that, because
the scheme’s financial strength exceeds the threshold below which
the PPF would automatically step in, the trustee must by law
prepare to wind up the scheme outside the PPF. This task will now
be undertaken by L&G.
As a subsidiary of bankrupt
US vehicle component manufacturer Federal Mogul, Turner &
Newall went into administration in October 2001 leaving the 40,000
member T&N pension scheme with a deficit of some
£875m.
The scheme’s financial
position is such that it will never be able to pay members’ full
original pensions, noted its trustees in a statement announcing the
deal with L&G.
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