Royal Mail Pension Plan, London, insured £450 million ($631 million) of liabilities for the Post Office section of the plan in a buy-in with Rothesay Life, said a spokesman at Lane Clark and Peacock, the pension fund's consultant.
The bulk annuity transaction covered the liabilities of all 5,700 plan participants accrued after 2012, when Post Office was split out from the privatized Royal Mail. The U.K. government covers the liabilities accrued prior to 2012.
The Post Office section of the £9.6 billion Royal Mail Pension Plan had £420 million in assets as of March 2016. A current asset size was not available. The deal was the pension fund section's first buy-in.
"This is an important step in improving the security of Post Office workers' pension benefits," said Joanna Matthews, independent chairwoman of the Royal Mail Pension Plan, in a news release. "We carefully considered the available options before running a process to select Rothesay Life and implement a bulk annuity transaction. It is through the collaboration of all parties that we were able to lock into this opportunity quickly and achieve an excellent outcome for the Post Office Limited Section."
Sacker & Partners, ARC Pensions Law, Slaughter and May, and Gowling WLG advised on the transaction in addition to LCP.
Further details from the pension funds could not be learned.