Phoenix : completes a further £360 million bulk annuity deal with the Marks and Spencer Pension Scheme

4 November 2020

Phoenix completes a further £360 million bulk annuity deal

with the Marks and Spencer Pension Scheme

This announcement marks the Scheme's third transaction with Phoenix

Phoenix Group, the UK's largest long-term savings and retirement business, today announces that it has completed a £360 million bulk purchase annuity with the Trustee of the Marks and Spencer Pension Scheme.

This buy-in marks the Scheme's third transaction with Phoenix, securing a total of £1.3bn of liabilities and, alongside the transactions completed by the Scheme in 2018 and 2019, it increases insurance coverage to around 30% of the Scheme's total pensioner liabilities.

The Trustee approached the market earlier in the year as market volatility presented a favourable pricing opportunity. The existing "umbrella contract*" structure between Phoenix and the Marks & Spencer Pension Scheme and the Trustee's efficient decision-making framework enabled both parties to take advantage of the environment and move quickly.

Justin Grainger, Phoenix Group's Head of Bulk Purchase Annuities, said: "We are delighted to continue to support the Marks and Spencer Pension Scheme on its long term de-risking journey. Today's announcement builds on a relationship established in 2018 that has now secured £1.3bn of the Scheme's liabilities. This latest transaction demonstrates how an umbrella contract structure can benefit all parties if trustees are set up to react to favourable pricing opportunities."

The Trustee was advised by Lane Clark & Peacock (LCP), the lead adviser for the transaction, and Linklaters on legal matters.

Graham Oakley, Chair of the Marks and Spencer Pension Trust, said: "We're pleased to announce the purchase of this additional buy-in policy, providing another important contribution to the Trustee's ongoing objective of reducing the longevity risk in the Scheme to increase the security of all members' pensions. Through a collaborative approach with the Company and our existing relationship with Phoenix, we were able to act quickly and benefit from the market opportunities seen during 2020 to complete a further well-priced transaction."

Myles Pink, Partner at LCP, said: "The M&S Pension Scheme has been able to take a further step to remove longevity and other risks,  building on the thorough preparatory work carried out for its previous buy-in transactions.  The Scheme has again demonstrated how well-prepared pension schemes that are flexible in their approach and have umbrella terms in place can efficiently lock into market opportunities when they arise." 

-Ends-

*Umbrella contract: an overarching arrangement with an insurer under which the pension scheme trustee may enter into successive buy-ins to insure different tranches of liabilities, on the same terms. The main advantage of these types of contract is that they save time and cost in the longer term and provide a clear and transparent path for future transactions.

Enquiries

Shellie Wells

Head of Corporate Communications

Phoenix Group

020 3735 0922 / 07872 414 137 [e-mail]

Rachel Esland

PR and Public Affairs Manager

Phoenix Group

0131 245 0489 / 07892 705093 [e-mail]

Notes to editors

About Phoenix Group

Phoenix has become the UK's largest long-term savings and retirement business following the completion of the ReAssure acquisition and is also the largest consolidator of closed life and pension funds in Europe.

Phoenix has businesses in the UK, Germany and Ireland, split across three key business segments: UK Heritage, UK Open and Europe.

The Group specialises in the acquisition and management of closed life insurance and pension funds (its Heritage business). Phoenix is a leader in the safe and efficient management of UK Heritage business. The UK Heritage segment comprises products that are no longer actively marketed to customers and has been built through the consolidation of over 100 legacy insurance brands.

In addition, Phoenix's UK Open business manufactures and underwrites long-term savings and retirement products to support people saving for their future. These products are actively marketed to new and existing customers, primarily under the Standard Life brand. This segment is underpinned by a strategic partnership with Standard Life Aberdeen following the Phoenix Group's acquisition of Standard Life Assurance Limited in 2018. Standard Life Assurance is a long-established expert in workplace pensions, personal pensions, long term savings and retirement solutions, and its customers and clients include individual savers and some of the largest employers in the UK, as well as professional advisers. The UK Open business includes a growing BPA business. Phoenix Group also has a market leading brand - SunLife - which sells a range of financial products specifically for the over 50s market.

The European business spans a range of both Open and Heritage products across three segments: Ireland, Germany and the International Bond in the UK. Our focus is on protecting our existing assets, optimising sales and driving efficiencies, which enables us to maximise value in these businesses and provides a platform for potential future consolidation in Europe.

Phoenix Group is a member of the FTSE 100 index, and has circa 14 million policies and over £300 billion of assets under administration.