* 'Buy-out' deal covers 4.7 bln stg in liabilities
* Scheme has 28,000 retirees, 11,000 still-working members
* Firms with 40 bln stg in liabilities seeking quotes -
Rothesay
By Simon Jessop
LONDON, Sept 26 (Reuters) - Telecoms firm Telent and insurer
Rothesay Life have agreed Britain's biggest ever pension
transfer deal, covering 4.7 billion pounds ($5.81 billion) in a
move that Telent said would secure future payments to 39,000
members.
Companies are increasingly keen to shift pension scheme
liabilities off their balance sheet to insurers like Rothesay
via deals known as buy-ins and buy-outs, although many, like
Telent, have had to wait until their schemes were better funded.
The deal will ultimately see Rothesay take on responsibility
for paying the pensions to around 28,000 retirees and around
11,000 members of the GEC 1972 Plan still working, many hired by
Telent's previous incarnations GEC and Marconi.
"The Trustee... has done a fantastic job to eliminate the
significant funding deficit that existed in the Plan only 10
years ago and get the scheme to a position where it can benefit
from the hugely more secure future that this transaction
provides," Telent Chief Financial Officer Heather Green said.
The deal is structured in two parts. The first, a so-called
'buy-in', sees the assets of the scheme transferred to Rothesay,
which in turn provides the funds for Telent to pay the pensions.
A second stage, the 'buy-out', will see Rothesay take on
responsibility for paying the pensions direct. This is set to
complete by 2022.
The deal is material for Rothesay, growing its assets under
management by more than 10% from its current 42 billion pounds.
It currently insures pensions for 770,000 individuals and pays
out 1.9 billion pounds in benefits each year.
"When compared to the much smaller Telent the transfer to
Rothesay Life will substantially improve the security of
members' pension entitlements," Telent said in a statement.
The security provided by Rothesay to potential customers was
at the heart of a surprise court decision to block the transfer
of 12 billion pounds in annuities from Prudential in
August. A decision on whether to appeal is imminent.
While Sammy Cooper-Smith, Business Development at Rothesay
Life, declined to confirm whether the appeal would be lodged, he
said the deal with Telent would give further confidence to other
big schemes that a deal was achievable.
Cooper-Smith said schemes with a combined 40 billion pounds
of liabilities were currently in the market asking for quotes,
although there was no guarantee deals would be struck.
Other insurers active in the market include Legal & General
and Pension Insurance Corporation.
($1 = 0.8091 pounds)
(Reporting by Simon Jessop; editing by Emelia Sithole-Matarise)