BHS2 Pension Scheme, London, insured all of its £800 million ($1 billion) in liabilities in a buyout with Pension Insurance Corp., a spokeswoman for the pension fund's adviser, Barnett Waddingham, said.
The transaction was the first and will be the only risk-transfer deal for BHS2, the pension fund set up last year following a £363 million cash settlement by Sir Philip Green, former owner of retailer BHS, after the company was deemed insolvent.
The BHS2 fund covers the liabilities of two predecessor funds: the £421 million BHS Pension Scheme and the £95.1 million BHS Senior Management Pension Scheme, both of London.
"A buyout guarantees participant benefits under the BHS2 scheme, and is the most secure solution for the participants of this fund. I am delighted that we have been able to accomplish this transaction far earlier than expected," Chris Martin, managing director at Independent Trustee Services Ltd., an independent trustee to the pension fund, said in a news release.
Separately, Menzies Pension Fund, Edinburgh, insured £75 million in a buyout, also with Pension Insurance Corp., a spokeswoman at Hymans Robertson, adviser to the trustee, said.
The structure of the buyout gives certainty over contribution requirements from the sponsor, John Menzies PLC, which agreed to sell its division, Menzies Distribution Ltd. on July 26, Hymans Roberston said in a news release.
"The buyout with PIC locks down risk today at less than the current funding shortfall, removing exposure to an unpredictable and volatile deficit. The policy has given certainty to the trustees regarding the level of support they require going forward from the sponsor. Hymans ran the process impressively ensuring the policy was in place ahead of the announcement of the conditional agreement to sell the business,"Giles Wilson, chief financial officer at John Menzies said in the release.