QinetiQ Group PLC (LON:QQ) today announced that the QinetiQ Pension Scheme (the Scheme) has completed its first bulk annuity insurance buy-in for approximately £690m. Scottish Widows were selected for the buy-in following a competitive process. The agreement covers approximately 33% of the Scheme’s liabilities.
The buy-in removes longevity, interest rate, and inflation risk for a proportion of the Scheme and is in line with the Group’s strategy of de-risking the pension liabilities. As a result of the transaction, the accounting pension surplus recorded on the Group’s balance sheet will reduce by an estimated £120m with no related cash impact.
LCP acted as lead adviser on the transaction. Legal advice was provided to the Scheme by Gowling WLG and to Scottish Widows by CMS.
Huw Evans of BESTrustees, Chairman of the Scheme, commented:
“This buy-in improves the risk profile and investment efficiency of the Scheme for all members and represents a significant step towards securing the benefits promised. The Trustees are grateful to their advisers and to the Company and its advisers all of whom worked seamlessly together to ensure that the transaction followed an effective and efficient process.”