£544m full buy-in of Evonik’s UK pension schemes in December 2020 follows $93 million lift-out completed for the US Evonik Corporation Retirement Plan in September 2020
19 Jan 2021
Legal & General Assurance Society Limited (“Legal & General”) today announces that it has agreed a £544 million full buy-in of four pension schemes sponsored by Evonik UK Holdings Ltd, securing the benefits of over 3,600 UK defined benefit pension scheme members and facilitating the merger of the four schemes as part of the de-risking process.
Legal & General Group has a long-standing relationship with Evonik Industries AG (“Evonik”), having provided investment management services through Legal & General Investment Management (LGIM) across the company’s UK and US pension schemes.
In the UK, both the Trustee and the company worked in partnership with Legal & General on a sole insurer basis to complete the buy-in transaction by the end of 2020, within just three months of initial discussions. The Trustee, following strategic advice from LCP, merged its four UK pension schemes to facilitate the transaction. Effective collaboration among all parties, combined with a solutions-driven approach, allowed the Trustee to achieve its aims, locking the premium to the value of the schemes’ assets held with LGIM during the contractual negotiation and transferring these assets directly in respect of the premium.
This transaction allows Evonik to continue its global pensions de-risking journey, having agreed a $93 million lift-out of the US plan in September 2020 with Legal & General Retirement America (LGRA), covering over 1,700 retirees.
Both transactions demonstrate the continued appetite for Pension Risk Transfer (PRT) in the UK and US and mark Legal & General’s second global Pension Risk Transfer (PRT) transaction.
LCP acted as lead transaction advisor, providing specialist de-risking advice to the Trustee, with Hogan Lovells International LLP providing legal advice. Clifford Chance provided legal advice to Legal & General. Other advisers include Aon acting as Scheme Actuary and investment adviser to the Trustee, as well as Willis Towers Watson and Eversheds Sutherland providing actuarial and legal advice to Evonik, respectively.
John Towner, Head of New Business, Legal & General Retirement Institutional: "This transaction demonstrates how we are uniquely placed to work across both the UK and US to offer global market-leading PRT services and help multinational companies secure their pension obligations across countries. Following the success of our transaction in the US, we are pleased to have been trusted to work on a sole insurer basis with Evonik and the UK Trustee to secure its members’ pension benefits in the UK. We continue to see high demand for PRT transactions across both markets and look forward to helping more global businesses on their de-risking journeys."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
Legal & General Retirement Institutional (LGRI) works with trustees and sponsoring companies of defined benefit (DB) pension schemes of all sizes to settle their pension obligations and secure scheme members’ benefits, through a full range of buy-ins, buyouts and other de-risking solutions. Our Client Services’ 12-month rolling Net Promoter Score (NPS) is above 70, which is widely regarded as being at a “world class” level. Including the premium to be received in relation to this transaction, LGRI has annuity assets estimated at £63bn.