The trustee of the Littlewoods Pensions Scheme has completed a £880m buy-in with Scottish Widows, it has been announced.

The transaction, which is Scottish Widows' largest bulk annuity transaction to date, covers the risks associated with c.60 per cent of the liabilities in the scheme. It will provide a monthly income to the trustee to meet pensions payable to nearly 7,000 scheme members.

The Littlewoods scheme has already enjoyed a strong surplus funding position and has been able to hedge its interest rate and inflation exposures. Pricing negotiated with Scottish Widows will enable the scheme to improve its funding position further and reduce risks.

The trustee was advised by LCP on planning, structuring and negotiation of the transaction, and ARC Pensions Law provided legal advice. Scottish Widows was advised by Eversheds Sutherland.

Littlewoods Pensions Scheme chairman of trustees Colin Thwaite said: "We are delighted to have completed this buy-in transaction with Scottish Widows, covering well over half of our liabilities. The attractive pricing of the transaction has closed the gap to being fully funded and further reduces the risk profile of our investments to meet members’ pensions.”

Scottish Widows bulk annuity director Emma Watkins added: "We are proud to have been chosen by the trustee for this significant buy-in. Scottish Widows, the trustee and their advisors have worked closely together to ensure the buy-in was implemented smoothly. Shop Direct is an important client of Scottish Widows’ parent Lloyds Banking Group which provides commercial banking services to the company. We are pleased to strengthen an existing relationship through this arrangement."

LCP partner David Stewart also commented: " We’re delighted to have helped the Littlewoods’ trustee achieve excellent value by articulating clear transaction objectives to the insurers and executing quickly once these objectives were met. The pricing negotiated surpassed the trustee’s original expectations and moves them significantly forwards towards full de-risking.”

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