Pensions Insurance Corporation picks up GKN scheme in £190m deal as engineer offloads liabilities

Oliver Gill
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GKN pension members will either be bought by PIC or transferred to a new scheme

Engineering giant GKN has shaken up its pension scheme and offloaded pension liabilities to a specialist insurer in a deal worth £190m.

Pension aggregator Pension Insurance Corporation (PIC) will take on 20 per cent of the liabilities of the scheme in a pension buyout of specific members.

Read more: UK firms to ditch £30bn of pension liabilities in 2017

The deal means GKN can set about winding up its pension scheme. Any members left in the scheme following the PIC buyout, predominantly those already in retirement, will be transferred to a separate scheme.

"This transaction marks an important step in the trustee’s long-term strategy to reduce risk as and when opportunities arise, whilst protecting the benefits of its members," said trustee chairman Rufus Ogilvie Smals.

Yesterday, experts predicted UK firms would take advantage of reduced pricing to de-risk from spiralling pension liabilities.

Read more: As pension deficits double could dividends be under pressure?

Willis Towers Watson estimated £30bn of liabilities would be moved to specialist insurers such as PIC during 2017.

Today's deal was an example of why businesses would be keen to reduce their exposure to troublesome defined benefit pension schemes, according to Matt Richards an actuary at PIC. He said:

This transaction is part of a long-term de-risking strategy undertaken by the trustee which allowed them to take advantage of a window of favourable pricing.

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