27 July 2021
LCP advised on a £925m transaction for the Legal & General Group UK Pension and Assurance Fund, which is the largest APP completed to date.
Legal & General Assurance Society Limited (“Legal & General”) today announces that it has completed a £925 million Assured Payment Policy (APP) transaction with the Legal & General Group UK Pension and Assurance
Fund (the “Fund”), securing the cashflows to support benefit payments payable to approx. 2,000 retired and 2,800 deferred members of the pension fund.
This is the largest APP transaction completed to date and is Legal & General’s third APP transaction.
As a result of this transaction, Legal & General’s total APP transaction volumes now exceed £1.5bn in value. This transaction also marks the insurer’s second such deal with a Legal & General pension scheme, following a £400 million APP transaction with the Legal & General Group UK Senior Pension Scheme in December 2020, which LCP also advised on.
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. An APP allows a pension scheme to begin its de-risking journey with an insurer and provides greater certainty on the timing and cost of a future buy-in or buyout.
The Trustee was advised on the transaction by LCP, Redington and Gowling WLG.
Charlotte Quarmby, Partner, LCP
“I am delighted to have advised the trustees on the next step on their de-risking journey. Right from the earliest days of the de-risking market, LCP has sought to support innovations that benefit our clients.
The APP product provides members with greater security whilst also providing the trustees with greater certainty of reaching their long term objective. This transaction provides a great example to others planning their journey to buy-out, demonstrating a new option for removing risks along the way.”
Laura Mason, CEO, Legal & General Retirement Institutional
“We are delighted to have provided increased certainty for the pension fund’s members with this transaction and are grateful for the proactive, collaborative approach taken by the trustees and their advisors to deliver a smooth transaction.
This transaction is further demonstration of our ability to deliver innovative, trusted solutions to meet the evolving needs of our clients. With three APPs now transacted and a partial conversion already completed, I’m excited to see real momentum growing with this solution. There is clear demand in the de-risking market for innovation and Legal & General want to be at the forefront of that.”
Chris Martin, ITS, Chair of the Trustee, Legal & General Group UK Pension and Assurance Fund
"The APP is a very significant event in the Fund's lifetime as we move closer to securing our members' benefits. This is a unique product that removes a large proportion of the investment risk from the Fund. We were very grateful to our advisers LCP, Gowling WLG and Redington for their guidance and support through this transaction."