Thursday 23 May 2019 4:04 pm

Marks & Spencer pension scheme transfers £1.4bn to two insurers


Jess Clark is a City A.M. news reporter covering private equity and investment.

Jess Clark is a City A.M. news reporter covering private equity and investment.

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Troubled retailer Marks & Spencer (M&S) has transferred £1.4bn in pension scheme liabilities to two insurance companies, bringing the total insurance coverage to two thirds.

Phoenix Group has insured £460m of liabilities, covering 5,000 pensioners, while Pension Insurance Corporation (PIC) has insured £900m of the £10bn pension scheme.

Read more: M&S braced for fresh decline in profits as store closures continue

Last year M&S transferred £1.4bn of liabilities to Phoenix and Aviva.

Graham Oakley, chair of the M&S Pension Trust, said the deal would provide “an important contribution to the trustee’s ongoing objective of reducing the longevity risk in the scheme to increase the security of all members’ pensions”.

The announcement comes the day after M&S reported that profit before tax fell 9.9 per cent in the last financial year, marking the third consecutive year of declining profits.

Yesterday, the high street giant outlined plans to close 85 stores and 25 branches of its food-only offering Simply Food over the next year as part of its restructuring plan.

The move to offload risks linked to company pension schemes to specialist insurance firms is partly connected to increasing life expectancy.

Pensions obligations sit on a company’s balance sheet and can limit financial options prompting company boards to pass on the burden.

Read more: Four things we learned from Marks & Spencer’s results


Justin Grainger, Phoenix head of bulk purchase annuities, said: “We look forward to building our relationship further with M&S and helping protect the security of their members’ benefits.

“This is a growing marketplace and, as this transaction demonstrates, Phoenix is well-placed to offer attractive solutions of other defined benefit pension schemes.”

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