Cobham jettisons pension costs to Goldman arm Rothesay Life

Michael Bow
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DEFENCE contractor Cobham yesterday offloaded £280m worth of staff pension costs to Goldman Sachs’ insurance business Rothesay Life.

Cobham’s pension plan, which has a £49m blackhole, will swap UK government bonds and cash for an insurance policy from Rothesay to cover the risk of rising pension costs.

The deal means 43 per cent of the FTSE 250 listed company’s total defined benefit pension liabilities are now covered by insurance policies.

The so-called bulk annuity transfer is used by pension schemes to reduce the risk of rising pensioner costs associated with increasing life expectancy.

The number of bulk annuity transactions are on course to hit a five year high this year as gilt yields rise.

Rothesay Life boss Addy Loudiadis said it was her firm’s tenth transaction over the £250m mark after striking deals with the likes of British Airways, P&O and General Motors in the past. “We are continuing to benefit from strong pension fund demand,” she said.

Goldman Sachs is due to sell its majority stake in the insurer after setting up the business in 2007. It follows similar investment bank exits from the pension insurance markets last year.