Standard Life in £335m stock exchange annuity deal

Phoenix Group-Standard Life office in Lothian Road, Edinburgh

Standard Life, part of Phoenix Group, said it has concluded a £335 million Bulk Purchase Annuity (BPA) transaction with the London Stock Exchange Group Pension Scheme.

This bulk purchase annuity arrangement covers 1,740 members from both sections of the London Stock Exchange Group Pension Scheme – the LSE Section and LCH Section.

Aon acted as the lead advisers for the transaction, while legal advice was provided to the trustees by Eversheds Sutherland LLP and investment advice by Redington.

Standard Life was advised by Herbert Smith Freehills LLP and ITM.

Standard Life senior business development manager Rhian Littlewood said: “This transaction was made possible thanks to the exceptional collaboration and engagement between all parties involved, working together to identify the solutions that best matched the specific de-risking requirements of the scheme.

“Increased funding levels meant that the scheme was well positioned to explore how to reduce its risks through a bulk purchase annuity deal.

“Through this collective effort, the Scheme was able to seize an ideal market opportunity, resulting in a smooth and efficient process, and we are pleased to have been part of this solution …

“The BPA market is seeing heightened levels of demand due to higher interest rates narrowing the funding gap of many defined benefit schemes.

“This is reflected in our record H1 2023 BPA activity, having written premiums totalling £3.2bn.”

Catherine Redmond, Trustee Executive at BESTrustees Limited and Chair of the Trustee, said: “This transaction provides greater certainty for our members and reduces the risks in the scheme.

“We appreciate the support from the sponsor throughout the scheme’s journey as well as the guidance from our advisers in taking this next step on our de-risking journey, and helping us achieve our long-term goal of being fully insured.”

Charlotte Quarmby, Partner in Aon’s Risk Settlement Group, said: “This transaction demonstrates that, despite a busy market, bespoke solutions can still be developed to meet client needs.

“By carefully engaging with insurers and having clarity from the Trustee on what was needed, we were able to help the scheme achieve an attractive outcome with Standard Life and to meet their objectives.

“In our role as specialist adviser we helped the two sections achieve a better result by taking them to market together – which allowed the trustee to access better pricing and terms due to the larger size.”

Georgina Wallis, DB Pensions Director at London Stock Exchange Group, said: “This step is another significant milestone in the group’s long-term pension strategy.

“We are delighted to have achieved this result for the scheme which was a product of the collective efforts of the Trustee, LSEG, their advisers and Standard Life.”

Mohamed Fazal, Head of Client Solutions at Redington, said: “We are proud to have played a role in getting this important transaction over the line.

“We’ve been working with the trustee to establish a clear set of objectives and a robust investment strategy and framework since 2017.

“For LSEGPS, this meant carefully restructuring the portfolio with a particular focus on reducing risk opportunistically and unlocking liquidity in preparation for buy-in.

“In an increasingly competitive market, this is the perfect example of how careful planning based around a shared vision can enable schemes to continue accessing attractive de-risking opportunities.”