QinetiQ Pension Scheme, Farnborough, England, insured £690 million ($899 million) in liabilities through a buy-in with Scottish Widows, said Charlie Finch, partner at Lane Clark & Peacock, which advised on the deal.
In its first risk-transfer transaction, the pension fund covered a third of its liabilities.
Mr. Finch said the deal is part of the QinetiQ pension fund's plan to move toward a full buyout in the future. "It puts the plan in a strong position to capitalize from buy-in pricing opportunities as they arise," he added.
The pension fund's surplus of £354 million as of Sept. 30 will be reduced by an estimated £120 million, LCP said in a news release.
"This buy-in improves the risk profile and investment efficiency of the plan for all members and represents a significant step towards securing the benefits promised," said Huw Evans, a director at BESTrustees and chairman of the pension fund, in the release.
Gowling WLG provided legal advice to the pension fund. Scottish Widows was advised by CMS Cameron McKenna Nabarro Olswang.