Legal & General has completed a pension risk transfer buy-out with the Nortel Networks UK Pension Plan.
This deal is the third transaction between the two parties and insures the final tranche of Nortel’s plan members’ benefits. It consisted of a £14m initial premium and was followed by a £6m top-up on buy-out. Legal & General has now insured £2.5bn of the plan’s liabilities.
The plan’s sponsor went into administration in 2009 and entered a Pension Protection Fund (PPF) assessment. While in assessment the plan was able to secure material additional funds from the Nortel insolvency process to improve member benefits. The plan agreed its first transaction with Legal & General in 2018 when it completed a £2.4bn buyout to secure the benefits in excess of PPF levels for members. The initial transaction included provision to secure additional benefits for members on receipt of further recoveries from the Nortel insolvency process and was followed by a £105m buy-out with Legal & General in 2021.
“This transaction marks a significant milestone in the plan’s journey since 2009 and is testament to the work carried out by the trustee board and their advisors to secure funds from the insolvency process,” said Dominic Moret, Head of Origination and Execution, UK PRT at Legal & General Retirement Institutional.
“The collaboration, flexibility and foresight shown by all parties enabled the plan to complete a ground-breaking initial transaction in 2018 with the ability to secure additional benefits through follow up transactions. We are proud to be providing financial security and certainty to plan members
“These transactions serve as excellent examples of the positive role that insurers are playing in securing, protecting and delivering pensions in the UK,” Moret added.
“I am delighted that after fifteen years of hard work by the trustee board and advisers we have completed the final buy out, having successfully recovered significant funds to provide members with benefits well above PPF levels. I would like to thank everyone concerned for their efforts,” added Clive Gilchrist, Chair of Trustees of the plan.