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EMI Group offloads £1.5 billion in U.K. pension liabilities


EMI Group Pension Fund, London, purchased a group annuity contract with Pension Insurance Corp. to secure the pension benefits of all participants in the frozen plan.

It is the largest pension buyout ever in the U.K. The transaction covers 1.5 billion ($2.2 billion) in liabilities and 20,000 members. The asset size of the plan and the premium paid to PIC are not being disclosed, said Citi spokesman Jeffrey French.

EMI Group Ltd. was owned by Citi until it was sold off in late 2011. Citi held on to the pension plan to facilitate the transaction, Mr. French said in a telephone interview. The plan was administered by a trustee company.

“This is a plan where the trustee and plan sponsor took the step of derisking the plan … to keep it insulated to volatility in the market,” said David Collinson, co-head of business origination at PIC, in a telephone interview. He added the main goal of the trustee was to secure the pension benefits of participants.

The previous largest pension buyout in the U.K. was about 1.1 billion, according to multiple sources.

Mercer and law firm Clifford Chance advised Citi; Premier Pensions Management, Towers Watson and law firm Sackers & Partners advised the trustee; and law firm Herbert Smith Freehills advised PIC.