Legal & General has purchased about £2.4 billion ($3.14 billion) worth of obligations in the Nortel Networks UK Pension Plan, releasing the fund from the control of the Pension Protection Fund.
Nortel went into the British version of bankruptcy in 2009, and its pension plan fell under the supervision of the protection agency amid the ongoing drama of lawsuits and insolvency proceedings, which ended last month. The Pension Protection Fund is the UK’s lifeboat for failing pension plans, and helps cover payments that the plans can’t.
Once the insolvency proceedings ended, Nortel was able to secure a deal with Legal & General, the large insurance and financial services firm. This move, according to Legal & General Retirement Institutional Chief Executive Officer Laura Mason, “provides flexibility and greater financial security to the members of the Nortel Networks UK Pension Plan.”
The pension risk transfer covers about 22,700 members (15,500 pensioners, 7,200 who are deferring benefits), and comes on the heels of Legal and General’s $5.7 billion deal to cover pensioners of British Airways, the UK’s largest bulk annuity deal.
David Davies, chair, Nortel Networks UK Pension Trust Ltd, expressed gratitude for Nortel to finally exit its insolvency problems. “This ends a near decade-long process for the plan and provides security for all our members, whether they are already receiving their pension or planning for their future retirement,” he said.