Gallaher pension fund completes $2.3 billion buy-in

Gallaher Pension Scheme, Weybridge, England, completed a £1.7 billion ($2.3 billion) buy-in with an annuity purchase from Standard Life, the insurer's parent company Phoenix Group said in a news release Thursday.

It is a full buy-in, covering all 7,600 participants of the pension fund sponsored by Japan Tobacco International, which acquired Gallaher in 2007.

It was the first bulk annuity contract for the pension fund, which was advised by Aon. Aon partner John Baines described the annuity purchase auction process as "highly competitive" and said in a statement that "securing all benefits in a single transaction with significant benefits for all stakeholders of the scheme has been a monumental achievement."

The agreement gives plan participants the right to pension benefit increases in the event of high inflation. "The additional inflation provisions provide great long-term income protection for members in their retirement, which I am sure they will particularly value at this time of rising inflation," said Robert Thomas, trustee chairman, in the news release.

Standard Life said in the release that the assets underlying the contract will be used to continue investing into U.K. infrastructure and socially responsible projects.

Calls to JTI and the pension trustee for further details were not immediately returned.