Publisher Pearson announced it is insuring £1.2 billion of its pension liabilities with Legal & General and Aviva.
According to Reuters, the deal—a “buy-in bulk annuity” that covers one-third of the scheme’s liabilities—“substantially reduces” Pearson’s risk of future retirement funding issues among plan members. These types of annuities have insurers take on a portion of a pension plan’s risk.
“We’re continuing to see very strong demand for bulk annuity deals as more and more trustees look to find the right solution to manage their defined benefit pension schemes,” Andy Briggs, CEO, Aviva UK Insurance, said in a statement.
According to Aviva, the deal is the largest it has negotiated so far. The company is currently focused on expanding its corporate pensions business.
In a separate statement obtained by Reuters, Clive Wellsteed, partner at LCP and lead adviser to the fund’s trustees, said that the deal showed that the industry was in line to see more than £10 billion in transactions for the fourth year in a row.