Four Evonik pension schemes have agreed to full buy-ins with Legal & General (L&G) totalling £544m, securing the benefits of over 3,600 UK defined benefit scheme members and merging the schemes.

The trustee and the speciality chemicals company worked in partnership with L&G on a sole insurer basis to complete the buy-in transactions by the end of 2020, within just three months of initial discussions.

A statement from L&G said effective collaboration among all parties, combined with a solutions-driven approach, had allowed the trustee to achieve its aims, locking the premium to the value of the schemes’ assets held with L&G Investment Management during the contractual negotiation and transferring these assets directly in respect of the premium.

Across the Atlantic, Evonik had previously agreed to $93m (£68.3m) lift-out of its US plan in September 2020 with L&G Retirement America, covering over 1,700 retirees.

As such, the company remarked that the transaction demonstrated a continued appetite for pension risk transfer (PRT) in the UK and US and noted that it represented L&G’s second global PRT transaction.

LCP acted as lead transaction adviser, Hogan Lovells International LLP provided legal advice, Clifford Chance provided legal advice to L&G, Aon acted as scheme actuary and investment adviser to the trustee and Willis Towers Watson and Eversheds Sutherland provided actuarial and legal advice to Evonik, respectively.

Evonik global head of pensions, Stefan Hentschel, said: “The company is pleased with the US and UK transactions which provide certainty for the members’ pensions with a strong provider and reduce the financial risk to the sponsor. We were able to leverage the relationship and work effectively with L&G to complete both transactions and de-risk the schemes in 2020.”

L&G Retirement Institutional head of new business, John Towner, noted: “This transaction demonstrates how we are uniquely placed to work across both the UK and US to offer global market-leading PRT services and help multinational companies secure their pension obligations across countries.

“Following the success of our transaction in the US, we are pleased to have been trusted to work on a sole insurer basis with Evonik and the UK trustee to secure its members’ pension benefits in the UK. We continue to see high demand for PRT transactions across both markets and look forward to helping more global businesses on their de-risking journeys.”

LCP partner, Charlotte Quarmby, added: “We are delighted to have been able to help the trustee successfully reach this milestone on their de-risking journey. In our role as specialist de-risking advisor we were appointed to design an optimal strategy for insuring the four schemes.

“We identified that a full buy-in could be achieved by all four schemes if they were taken to market together and by working with L&G we helped the trustee to move quickly to lock into an attractive transaction.”

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