Standard Life in £1.2bn Mitchells & Butlers annuity deal

Phoenix Group offices in Lothian Road, Edinburgh

Standard Life, part of Phoenix Group, said it has concluded a £1.2 billion Bulk Purchase Annuity (BPA) transaction covering 20,200 members of the Mitchells & Butlers Pension Plan.

Mitchells & Butlers operates UK restaurants, pubs and bars.

This bulk purchase annuity arrangement transacted in May, covering deferred and pensioner members of the plan.

XPS Pensions Group acted as the lead advisers to the trustees for this transaction, while legal advice was provided by Gowling WLG.

Rhian Littlewood, Senior Business Development Manager at Standard Life, said: “We are delighted to have been selected to partner with the trustees to secure the retirement incomes of over 20,000 members.

“This transaction marks a significant milestone for the plan, and Standard Life is proud to have played a role in supporting the Trustees to make this progress in their de-risking journey.

“Throughout the process, we worked closely with the trustees on a clear strategy and an innovative solution to help manage the sale of illiquid assets, which was crucial to the success of this transaction.

“Many schemes in the current market environment will face similar challenges to the plan, and Standard Life is able to support schemes through these to a successful outcome.

“This transaction demonstrates how innovation, good planning and co-operation between all parties can help facilitate a positive result.”

Jonathan Duck, chairman of the trustees of the Mitchells & Butlers Pension Plan, said: “The trustees are very pleased to have concluded a full buy-in with Standard Life, following a period of strong investment performance and continued support from M&B plc, the plan sponsor.

“The plan advisors, XPS and Gowlings, alongside Standard Life, have also displayed great flexibility in structuring the transaction in such a way that buy-in has been possible several years earlier than anticipated.

“This is an excellent result for all plan members and for M&B plc, something that the trustees have worked hard to achieve over the years.

“Both the Mitchells & Butlers Pension Plan and Mitchells & Butlers Executive Pension Plan are now secured with buy-in policies, a great resolution to the historic challenge of past pension deficits.”

Harry Harper, Risk Settlement Partner at XPS Pensions Group, said: “Our strong relationships with insurers made it possible to spot improving opportunities and attract a wide range of insurer quotations, stealing a march on other large schemes that were slower out to market.

“Working collaboratively with Standard Life, the result has been to provide real certainty to over 20,000 members and to the sponsor by making a bulk annuity affordable at the current time, when previously it was considered to be years away.”

Jo Carter, Risk Settlement Partner at XPS Pensions Group said: “This is one of the most complex transactions in recent years.

“Significant planning and innovation from the XPS Investment team has been needed to tackle the plan’s multiple illiquid asset holdings.

“The work undertaken by the XPS administration team, from onboarding the administration in July 2022, has been fundamental to enable attractive pricing and a transfer of data and benefit risk to Standard Life from the point of buy-in.”

Christopher Stiles, Partner at Gowling WLG said: “The M&B Trustees have been a client of the Gowling pensions team for many years, so it is rewarding from both a professional and personal standpoint to see this excellent outcome for the plan members.

“The Gowling team is proud to have played its part in the preparation and delivery of the trustees’ long-term strategy to secure member benefits.”