Standard Life in £1.7bn Gallaher bulk annuity deal

Phoenix Group-Standard Life office in Lothian Road, Edinburgh

Standard Life, part of Phoenix Group, said it has concluded a £1.7 billion bulk purchase annuity (BPA) transaction covering all members of the Gallaher Pension Scheme.

“The transaction … secures the benefits of 7,600 members of the scheme,” said Standard Life.

“As part of the transaction, members have been granted the right to additional pension increases in the event of high inflation, further enhancing their long term financial security.

“2021 was a record year for Standard Life in terms of BPA activity, with this transaction demonstrating the continued expansion of its BPA proposition, and follows on from the £1.8bn buy-in announced last week.

“The assets underlying the contract will be used to continue Standard Life’s investment into UK infrastructure and socially responsible projects that are vital to the UK’s post-pandemic recovery.

“The transaction represents the first bulk annuity contract secured by the Trustees, who were advised by Aon and Hogan Lovells. DLA Piper advised Standard Life.”

Phoenix Group announced a major investment in the iconic Standard Life brand last year after buying the brand from Edinburgh-based asset management giant Abrdn.

Abrdn retains a roughly 15% stake in Phoenix Group and the two firms have an asset management partnership that has been extended to at least 2031.

Justin Grainger, Managing Director of Defined Benefit Solutions at Standard Life, said: “We are delighted to have been selected to partner with the Trustee to secure the retirement incomes of their 7,600 members.

“This transaction demonstrates the ongoing commitment of Standard Life to the BPA market, and our ability to provide varied and flexible solutions to all sizes and types of schemes. We are pleased to welcome the Schemes’ members to Standard Life.”

Robert Thomas, Trustee Director at Law Debenture and Chair of the Trustee of the Schemes, said: “I’m delighted by the completion of this project to secure members’ benefits with Standard Life.

“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. Standard Life were selected following a period of thorough preparation and a robust competitive tender process.”

Aon partner John Baines said: “Securing all benefits in a single transaction with significant benefits for all stakeholders of the scheme has been a monumental achievement.

“By preparing thoroughly in advance, including asset de-risking over a number of years and a carefully structured transaction process, the Trustee benefited from a fiercely competitive auction process.”