Pearson’s pension buy-ins with L&G and Aviva amount to GBP 1.2 billion

Pearson, a major participant across the education & learning sector, has scarcely been involved in two major pension buy-in agreements with Legal & General and Aviva, for a valuation amounting to nearly GBP 1.2 billion. Individually valued at GBP 600 million, each plan covers around 2,400 pensioner members. Reportedly, both the plans are expected to cover two-thirds of the plan’s pensioner liabilities.

Reports cite that these plans are a part of the long-term pension plan of the firm, which will help in reducing the pensioner risk through the alignment of investment & benefit for paying the pensioners. The buy-ins also comprise the facility of the pension program longevity risk transfer from Pearson to Legal & General and Aviva, which would considerably help to minimizing the risk of the pension being written off by the firm, thereby securing the future of the pensioners.

Reliable sources state that the buy-ins also offer a de-risking tool through the “umbrella” contract structure that facilitates the completion of the buy-ins within the current contracts. Pensioners will not be conditioned to any change in the way the pension is provided, as the buy-ins are the pension scheme funds. The core benefit of the umbrella structure is the ability of the members to rapidly complete potential buy-ins in case of competitive pricing. Additionally, sources say that the umbrella structure offers contract terms and strong relationship building to the insurers.

Aviva was chosen for the scheme through a competitive bidding process executed by LCP (Lane, Clark, and Peacock) and legal advice offered by Linklaters. The former now offers Pearson Group’s protection, corporate pension, and health insurance coverage to consumers.

It has been reported that Aviva is rather confident regarding the robust demand for bulk annuity agreements as more members have been looking out for accurate solutions to handle their desired benefit pension plans.