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Pension Funds

Nortel completes £2.4 billion buyout with Legal & General unit

Nortel Networks UK Pension Trust Ltd., Surrey, England, completed a 2.4 billion ($3.1 billion) buyout with Legal & General Assurance Society Ltd., part of Legal & General.

The chair of the pension fund's trustee board, David Davies, wrote in a letter to participants — published on the fund's website — that the agreement was made Oct. 1. Mr. Davies wrote that the trustee had sought professional advice and undertook a selection process for the provider of the buyout.

In a separate news release, L&G said the buyout covers around 15,500 retirees and about 7,200 deferred participants.

The pension fund had been in the Pension Protection Fund's assessment period for entry into the lifeboat fund after parent company Nortel Networks went into insolvency in 2009. The fund was in assessment while litigation and insolvency proceedings took place worldwide.

In March, adviser to the trustees PricewaterhouseCoopers said the fund was set to receive total insolvency recoveries of around 1.2 billion, with about 200 million expected over 2018 and 2019. Those issues were resolved and the fund received "substantial additional funding as a result," the release said.

"We are pleased to have been able to deliver such a great result for the members of the plan," Mr. Davies said in the L&G release. "This ends a near decade-long process for the plan and provides security for all our members, whether they are already receiving their pension or planning for their future retirement."

KPMG acted as insurance broker and derisking adviser to the trustee. Travers Smith provided legal advice to the trustee, and Eversheds Sutherland advised L&G on legal matters. Willis Towers Watson was the fund actuary and Mercer acted as the trustee's investment adviser.