LCP advises on two buy-in transactions between Aviva and the Northern Bank Pension Scheme totalling £257m

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LCP has advised on two pensioner buy-ins between Aviva Life & Pensions UK Ltd  and the Northern Bank Pension Scheme.

The first transaction of c£227m was completed in September 2021 and the second transaction insured a further £30m of recently retired pensioners in December 2021.  Northern Bank Limited t/as Danske Bank is a leading bank in Northern Ireland and a growing bank in Great Britain. Part of the Danske Bank Group, they provide services to personal, business and corporate customers.

The two buy-in transactions were completed using an ‘umbrella contract’[i].  This will provide an efficient basis for future transactions.  Aviva will insure the defined benefit pension liabilities of 800 members in total, removing the investment and longevity risk of these members from the Scheme. Members will experience no change in the amount of benefits they receive or the way in which they are paid as a result of the deal.

The Scheme Trustee was independently advised throughout the process by LCP and Sackers.  Aviva received legal support from DLA Piper. 

Lesley Bourke, Chair of the Trustee of the Scheme, said: “These buy-in policies represent an important further step in the Scheme’s journey to reduce investment risk and increase the security of members’ benefits.  After a detailed due diligence and selection exercise we chose Aviva as they were best able to meet the Trustee’s requirements and we’ve been very pleased with their level of engagement and responsiveness to the Trustee’s needs.”

Ben Adams, Partner at Lane Clark & Peacock LLP, added: “It is unusual to complete two transactions in such quick succession and this really demonstrates how an umbrella contract structure can facilitate fast decisions and enable trustees to take advantage of attractive opportunities when they arise. Having completed the first transaction the Trustee and Bank were keen to lock in terms for a further tranche of benefits, and we’re delighted to have played our part in making that happen.”

Jamie Cole, Head of Bulk Purchase Annuity Origination at Aviva, said: “We’re delighted to have helped the Trustee with their long-term de-risking strategy in 2021.  All the teams have worked collaboratively throughout, creating a bespoke solution which addresses the specific requirements of the scheme, at attractive terms for both Aviva and the Trustee.  The follow on transaction in December was a quick and efficient process, supported by the umbrella contract put in place as part of the first transaction and provides further security for the scheme’s members.”

Marcus Mollan, Director, Annuity Asset Origination at Aviva, said, “The premiums from annuity transactions like these for the Northern Bank Pension Scheme are invested by Aviva into long-term, cashflow-generating assets. Aviva’s annuity business supports our ambitions and commitments to responsible investment, sustainable finance, the decarbonisation of our asset portfolio towards Net Zero, and the increasing allocations that we are making to green assets.  We are looking forward to making further significant investments in these areas over 2022.”

[i] An umbrella contract is an overarching set of terms and conditions between parties to support a quick and efficient process in future de-risking activity.