June 6, 2019
By Simon Jessop
LONDON (Reuters) – Rolls-Royce’s pension scheme has agreed to transfer 4.6 billion pounds ($5.83 billion) of assets to insurer Legal & General in Britain’s largest ever transfer of corporate pension risk.
Companies are keen to shift workers’ pension obligations to insurance companies to remove the risk of such schemes from their balance sheets. Consultants predict 30 billion pounds worth of UK pension transfer deals this year.
Rolls-Royce will shift the assets and liabilities of around 33,000 pensioners in its UK Pension Fund, it said in a statement, out of a total membership of 76,000 members.
The aerospace engineer said the deal will reduce its post-retirement obligations by around 4.1 billion pounds, leaving the remaining liabilities “smaller with less risk for the Trustee and Rolls-Royce to manage in the future”.
“This agreement will result in increased security for Rolls-Royce pensioners and reduced risk for our business,” Joel Griffin, Head of Global Pensions & Benefits, Rolls-Royce, said.
As part of the deal, Rolls-Royce said it would pay a cash contribution of around 30 million pounds to L&G.
(Reporting by Simon Jessop; Editing by Rachel Armstrong)