£400m transaction for the Legal & General Group UK Senior Pension Scheme is the largest APP written to date
26 Jan 2021
Legal & General Assurance Society (“LGAS”) today announces that it has agreed a c.£400m Assured Payment Policy (APP) transaction with the Legal & General Group UK Senior Pension Scheme (the “Scheme”).
The innovative de-risking transaction provides investment risk protection for the pensions of around 200 deferred members and 385 pensioner members. Completed in December 2020, it follows Legal & General’s previous £250m APP transaction with the AIB Group UK Pension Scheme in late 2019.
Legal & General’s APP solution provides pension schemes with an efficient and precise method of liability cashflow matching, selectively insuring against investment related risks such as changes in asset yields, interest rates and inflation. In this case, the product’s flexibility allowed for the transaction to be structured around the Scheme’s existing buy-in arrangements, creating a highly tailored de-risking outcome. By insuring against the selected risks, it also provides enhanced certainty for the Scheme of reaching buyout within its planned timeframe.
The Trustee was advised on the transaction by LCP, Redington, Gowling WLG and Premier Pensions. Legal advice was provided to Legal & General by Clifford Chance.
Read more about Assured Payment Policies.
Frankie Borrell, Head of Client Solutions, Legal & General Retirement Institutional: "We are delighted to have delivered improved certainty for the trustees and members of our Legal & General Group UK Senior Pension Scheme. We look forward to working with the Trustee in the years ahead as they progress towards their ultimate goal of full pension scheme buyout.
Our innovative APP solution allows pension schemes to lock down investment and inflation risk on attractive terms, with the ability to then add longevity and wider demographic risk protection in the future through conversion to a bulk annuity. With the market volatility that we’ve observed over 2020 we expect to see continued interest in solutions which create greater certainty for pension schemes earlier in their de-risking journey."
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.