Deal Secures ‘the Benefits of All 53,000 Retirees and Deferred Members’ of Boots Pension Scheme
The Boots Pension Scheme has secured a landmark deal with Legal & General (L&G), ensuring the benefits of all 53,000 retirees and deferred members. The full buy-in, valued at £4.8 billion, marks the UK’s largest transaction of its kind by premium size.
Boots will accelerate approximately £170 million in committed payments to the scheme and has pledged additional contributions of around £500 million. L&G will now be responsible for paying members their pensions, effectively closing the chapter on the old Boots pension scheme.
This move comes as part of a growing trend in pension risk transfer, where defined-benefit pension providers pay insurers to take on some scheme liabilities to reduce uncertainty. L&G has already completed £13.4 billion worth of pension risk transfer deals globally this year, up from £9.5 billion the previous year.
Alan Baker, chair of trustee of Boots Pension Scheme, expressed satisfaction with the deal, noting that the scheme will no longer rely on Boots to pay benefits, ensuring pensions are protected for years to come. Sebastian James, senior vice president of Boots, hailed the agreement as the “gold standard outcome” for the pension scheme.
L&G’s CEO, Andrew Kail, praised the collaboration with the Boots Pension Scheme, calling it the company’s largest single transaction to date. The firm’s solvency ratio of 224% provides ample resources to pursue further growth opportunities.
Despite the positive news, L&G shares fell slightly in Friday morning trading. However, the company’s strong financial performance in the first half of the year, with a better-than-expected operating profit of £941 million, underscores its resilience in challenging market conditions.
Overall, the deal between L&G and the Boots Pension Scheme represents a significant milestone in securing the financial future of thousands of retirees and deferred members, highlighting the importance of effective pension risk management in today’s uncertain economic climate.
