The Coats UK Pension Scheme has completed a £1.3bn bulk purchase annuity buy-in deal with Pension Insurance Corporation. The deal covers the pensions of 18,042 scheme members.
To manage the scheme’s complex illiquid asset holdings, PIC received illiquid assets in specie and agreed a deferred premium to allow timely redemption of further illiquid holdings. The scheme previously completed a buy-in in 2022, covering £350m of liabilities; this latest transaction covers the remainder of the scheme.
“This is a significant transaction for the scheme members, who now all have their pensions guaranteed by a UK pension insurance company, and for the sponsor, which has fully de-risked the pension scheme for which it is responsible,” said Chris Martin, Chair of the Trustee of the Coats UK Pension Scheme and Executive Chair at Independent Governance Group.
“The trustee is delighted to complete the transaction. I want to thank PIC for their innovative, flexible approach to addressing the complexity of the illiquid holdings, as well as our advisors LCP, Redington and Sackers for their support throughout. Critical to delivering this outcome and the continuity of service to members has been the outstanding team at the Coats Pensions Office,” Martin added.
“Shareholder sentiment was overwhelmingly positive following the previous scheme buy-in and we were therefore very pleased to be able to help facilitate this transaction. Our contribution neatly aligns shareholder interests, by removing sponsor responsibility for the scheme’s assets and liabilities, with those of scheme members, who now all have their pensions insured,” said Jackie Callaway, Chief Financial Officer at Coats Group.
“We are proud to have been able to complete this complex transaction, demonstrating our commitment to meet trustee needs in challenging circumstances. It was a pleasure to work with Chris and the trustee team on this transaction. One notable feature of this transaction was the active support from Coats as sponsor, reflecting their experience of positive sentiment achieved by aligning shareholder and Scheme member interests,” added Matt Richards, Head of Origination Structuring at PIC.
LCP acted as lead transaction consultants. PIC received legal advice from Herbert Smith Freehills. The trustees received actuarial advice from LCP, legal advice from Sackers and investment advice from Redington. The company advisors were Isio and Baker McKenzie.
