The TT Group (1993) Pension Scheme has agreed a £400m buy-in with Legal & General Assurance Society Limited, securing the benefits of around 5,000 retirees and deferred members.

As a result of this buy-in, the sponsoring company, TT Electronics, will no longer bear any investment, longevity, interest rate or inflation risk in respect of the scheme, with the scheme's liabilities now matched by the insurance policy,

According to TT Electronics, the buy-in will therefore provide an immediate benefit to the group's current year cash flow of £6m, as well as an equivalent annual improvement to free cash flow in future years.

TT Electronics and TTG pension trustees worked together for several years to prepare the pension scheme to secure benefits with an insurer, having undertaken key preparatory work that allowed the trustee to move quickly and lock in favourable movements.

As part of this, Legal & General was able to closely link its price to the scheme’s existing assets, giving the trustee price certainty while the terms of the buy-in were being agreed.

The sponsor and trustee were advised on the transaction by Mercer, while investment advice was provided to the trustee by Schroders Solutions, legal advice was provided by Mayer Brown, and secretarial services and coordination was provided by PI Consulting.

TT Electronics chief financial officer, Mark Hoad, highlighted the transaction as an "excellent outcome for our defined benefit pension scheme members, TT, and our shareholders".

“We have worked hand in hand with the scheme’s trustee over the last few years to reach this position," he continued.

“Those efforts, combined with excellent stewardship by the trustee directors, has meant that the scheme can now be fully de-risked for the benefit of members and the group. Importantly, the successful execution of this transaction means there will be a significant increase in TT’s annual free cash flow."

Legal & General Retirement Institutional director, Julian Hobday, added: “Our tailored price locks provide price certainty for trustees, particularly during the current period of high market volatility.

“We’re pleased to have been able to provide this certainty to the trustee on the latest stage of its de-risking journey.

“The success of this transaction is also further evidence of how important the member experience is for pension schemes looking to de-risk."


This article first appeared on our sister title, Pensions Age.

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