WH Smith on Monday said it had taken out a bulk annuity insurance policy with Standard Life, through which the Phoenix Group subsidiary will cover the costs of the retailer’s £1bn pension scheme.
The high-street bookseller’s insurance policy will see Standard Life pay the pensions of the almost 13,000 members of WH Smith’s defined benefit pension scheme.
The insurance policy removes any long-term risks WH Smith might face in paying out pensions, including around the lifespans of its members, underperformance of its investments, and inflation and interest rate changes.
Bulk annuity insurance policies let pension trusts de-risk their pensions schemes by passing liability for any payments to a third-party insurer.
WH Smith purchased the insurance policy for an undisclosed sum, using the pension trust’s own assets, Standard Life said.
The deal comes after Standard Life in January struck a similar deal to pay the pensions of the Imperial Tobacco Pensions Fund’s circa 6,600 members through a buy-in into the Rizla maker’s £1.8bn scheme.