Boots has announced a £4.8 billion buy-in policy with Legal & General. The Buy-In insures all 53,000 members in the Boots Pension Scheme, making it the largest single transaction of its kind.
Boots will bring forward approximately £170 million of already committed payments to the Scheme and has committed to pay extra contributions expected to be approximately £500 million. The previous guarantee from a Walgreens Boots Alliance entity to the Scheme has been terminated and replaced with a smaller temporary guarantee, which will decrease in line with the settlement of these commitments.
In due course, members of the Scheme will be provided with individual annuity policies issued by Legal & General, who will then be responsible for paying members’ benefits directly enabling the Scheme to be wound-up. The process is expected to take up to two years.
Alan Baker on behalf of Law Debenture, as Chair of Trustee, Boots Pension Scheme: “This agreement with Legal & General gives added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures. We welcome the additional payment from Boots, in addition to the sum it has already committed. As a result, the Scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come. “I would like to take this opportunity to thank my fellow Trustee directors and our predecessors, the Scheme officers and advisers for their hard work over many years to reach this positive outcome for our members.”
Sebastian James, Senior Vice President and Managing Director, Boots: “We are very pleased to have achieved the gold standard outcome for our pension scheme and to have fully secured the benefits of all members with a highly respected insurer. This will provide greater certainty to both the Scheme members and to Boots, and is an excellent outcome for both parties.”
Andrew Kail, CEO, Legal & General Retirement Institutional: “We are very pleased to have agreed this buy-in today with the Boots Pension Scheme, representing our largest ever single transaction. This is testament to our long-standing relationship with the client, and I am proud that we have been able to work seamlessly across our insurance, reinsurance and investment management capabilities to deliver an excellent outcome.”
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