Reckitt Benckiser Pension Fund completes £415m buy-in with Scottish Widows

11 November 2020

The Trustees of the Reckitt Benckiser Pension Fund have secured a pensioner buy-in with Scottish Widows, covering around half of the Fund’s pensioner liabilities. The £415m transaction removes the interest rate, inflation and longevity risk relating to these liabilities. The transaction was completed on 25 March 2020, shortly after the beginning of the UK-wide lockdown due to COVID-19.

The Trustees were advised by Willis Towers Watson and Travers Smith, with Scottish Widows advised by Herbert Smith Freehills. LCP provided advice to the sponsor.

Chair of the Trustees, Dr Brian Bentley, said:

“The Trustees have been working with our advisers over a number of years to secure the right long-term de-risking deal for the Fund. We were impressed with the agility shown by Scottish Widows, alongside our advisers, to complete the transaction at a particularly challenging time. We are very happy to have formed this partnership with Scottish Widows, which is an important step in the Fund’s de-risking journey and in doing so improved the security of benefits for all members.”

Matt Wilmington, Co-Head of Origination and Structuring at Scottish Widows, said:

“We were delighted to be selected by the Trustees as their partner for this de-risking transaction. The buy-in was notable not only for its completion at the start of lockdown, with the economic and logistical challenges that brought, but also for the work carried out by the Trustees and their advisers to get the Fund into a position where a transaction was viable for both parties. We’re grateful for that and are looking forward to developing our relationship with the Trustees over the longer term.”

Shelly Beard, Willis Towers Watson, lead transaction adviser, said:

“We were very pleased to help the Trustees to secure this transaction with Scottish Widows and the Trustees should be commended for staying completely focused on achieving the best outcome for members despite incredibly challenging external circumstances. The Trustees and the sponsor, Reckitt Benckiser, had set a price target and Scottish Widows worked collaboratively to provide an attractive outcome for the Trustees, despite the logistical challenges of a national lockdown and unpredictable economic circumstances. This transaction demonstrates that well-prepared schemes can achieve great outcomes in a flexible bulk annuity market, particularly in times of significant market volatility.”

Source: Willis Towers Watson