National Grid U.K. Pension Scheme, Binfield, England, insured £2.8 billion ($3.4 billion) in a buy-in with Rothesay Life, Mike Edwards, partner at Aon, adviser on the deal, said in a telephone interview.
Following its first risk transfer deal Tuesday, the £20 billion pension fund for employees of the electric and natural gas industry is the largest U.K. plan to manage longevity risk through a buy-in, Mr. Edwards said.
"The buy-in provides greater certainty and assurance about the future costs of providing members' pensions, and we see this as a positive and prudent way of managing the overall funding and risk of the scheme," said Nigel Stapleton, chairman and trustee at National Grid U.K. Pension Scheme, in a news release.
"This is an important step in our long-term strategy to reduce the level of risk within our pension arrangements and demonstrates our commitment to security for our members," Chief Financial Officer Andy Agg said in the release.
The National Grid buy-in is the third transaction in as many weeks for Rothesay, which recently insured the liabilities of Telent's and Pernod Ricard's pension funds in a $5.8 billion buy-out and a $4.7 billion buy-in, respectively. Telent insured majority of the £4.7 billion plan's assets, while Pernod Ricard's deal saw the largest ever number of participants — 10,000 — who have yet to retire.