FTSE 100 energy giant SSE is to unhitch itself from £1.2bn of pension liabilities, passing over responsibility to specialists from Legal & General (L&G) and Pension Insurance Corporation (PIC).
L&G will take on £800m of liabilities by providing longevity insurance – where payouts are triggered when pensioners live beyond a certain age. PIC will provide £350m of cover across two pension buy-ins; here part of the total payouts to pensioners are transferred to an insurer.
The news comes as figures released yesterday indicated an 88 per cent spike in liabilities jettisoned by UK companies.
During the first six months of 2017, some £5.1bn of pension buy-ins and buy-outs were completed. This compares with £2.7bn in the same period in 2016.
"Looking ahead, 2017 is well on track to exceed £10bn of buy-ins and buy-outs for the fourth year running and has the potential to exceed the record £13.2bn set in 2014," said LCP partner Charlie Finch.
Tony Fettiplace, the chair of trustees for the Scotia Gas Networks – one of the two SSE schemes being de-risked by PIC – said: "Reducing risk over time is an absolute priority for us and it is important to do this in the most cost effective way."
Hyman Robertson was lead adviser across all three transactions with CMS providing legal advice to scheme trustees and Eversheds Sutherland acting as lawyers for L&G.