LONDON (Reuters) – British retailer Marks & Spencer’s pension scheme has transferred a total of 1.4 billion pounds ($1.77 billion) in liabilities to two insurance groups Pension Insurance Corporation (PIC) and Phoenix, the insurers said on Thursday.
British companies are increasingly offloading risks linked to their pension schemes to specialist insurance companies, partly because of increased life expectancy. A company’s pensions obligations sit on its balance sheet and can limit its financial options, so often boards seek to pass on the burden.
PIC is insuring 900 million pounds in liabilities of the 10 billion pound Marks & Spencer Pension Scheme in its first transaction with the scheme, it said in a statement.
Phoenix is insuring 460 million pounds in a second transaction, it said in a separate statement. This brings the total amount of M&S pension liabilities that Phoenix has insured to more than 900 million pounds, a Phoenix spokesman said.
Graham Oakley, chair of the Marks and Spencer Pension Trust, said that the deals provided “an important contribution to the trustee’s ongoing objective of reducing the longevity risk in the scheme to increase the security of all members’ pensions”.
Last year, the M&S pension scheme transferred 1.4 billion pounds of its liabilities to Phoenix and another British insurer Aviva.
Advisers on the latest Phoenix and PIC deals were pensions consultants LCP and law firm Linklaters, the insurers said, while PIC also said it was advised by law firm CMS.
($1 = 0.7929 pounds)
(Reporting by Carolyn Cohn. Editing by Jane Merriman)