M&S passes on £1.4bn of its pension liabilities to Aviva and Phoenix

Nearly £1.4bn of Marks & Spencer’s pension liabilities were today passed to insurers Aviva and Phoenix.

It follows a trend of organisations including National Grid, Pearson and Smith Group transferring pensions calculated on worker’s final salaries over to insurers.

Read more: Zurich completes deal to cover £2bn of National Grid pension liabilities

Around £925m will be covered by Aviva while the remaining £470m will be taken on by Phoenix.

The M&S pension scheme currently holds around £9bn in liabilities, according to its most recent triennial valuation.

“The scheme’s strong funding position has allowed the trustee to follow a strategy of reducing risk by aligning investments more closely with the pension benefits we will need to pay to members,” said chairman of the M&S Pension Trust Graham Oakley.

“This bulk purchase annuity is a significant step in reducing longevity risk being managed by the trustee, providing additional security for all memberss benefits.”

Tom Ground, managing director of defined benefit solutions at Aviva added:

Not only does this latest deal build on the great relationship we already have with Marks and Spencer but as our largest bulk annuity deal to date, it also perfectly demonstrates our increased appetite for bigger deals

As the UK’s largest multi-line insurer, we’re in a pretty unique position as a provider as we can offer our clients a whole range of insurance products and our customers really appreciate the simplicity this provides.

Justin Grainger, Phoenix Group’s head of Bulk Purchase Annuities, also said the firm was looking forward to helping protect the security of the member benefits.

“This is a growing marketplace and, as this transaction demonstrates, we are well-placed to offer attractive solutions to other defined benefit pension schemes,” he explained.