Direct Line abandons plan to offload part of its pension scheme

 
Jessica Morris
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Direct Line is one of the UK's biggest insurers (Source: Getty)

Direct Line has abandoned the potential offload of part of its pension scheme, following the conclusion of an internal review.

It was part of a defined benefit (DB) scheme — in which monthly payouts are linked to an employee's final salary — going back to when the insurer was wholly owned by the Royal Bank of Scotland.

Direct Line concluded that the current situation was the most cost-effective way to manage its pension liabilities. City A.M. understands that market volatility in the wake of the Brexit vote was a secondary factor in its decision.

Sky News first reported that the firm had been in talks to sell part of its DB retirement scheme to an external investor until June's referendum on the UK's membership of the European Union.

Direct Line declined to comment.

The company's pre-tax profit slumped 5.2 per cent year-on-year to £298.5m in the second quarter of 2016.

The group said it had been "well prepared" for the EU referendum and immediate investment volatility was "actively managed".

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