The Gallaher Pension Scheme has completed a £1.7bn full scheme buy-in with Standard Life.

The deal, which was agreed in December, covers 7,600 members’ benefits and includes improved inflation protection.

As part of the agreement, scheme members have been granted the right to additional pension increases in the event of high inflation.

The transaction with the Gallaher Pension Scheme is the second largest in 2021 to date, following the Imperial Tobacco Pension Fund’s £1.8bn buy-in with Standard Life that was announced last week (13 January).

Standard Life, which is part of Phoenix Group, stated that the assets underlying the contract will be used to continue its investment into UK infrastructure and socially responsible projects.

This is the Gallaher Pension Scheme trustees’ first bulk annuity contract, with Aon and Hogan Lovells providing advice to the trustees.

Standard Life was advised by DLA Piper.

Commenting on the deal, Standard Life managing director of defined benefit solutions, Justin Grainger, said: “We are delighted to have been selected to partner with the trustee to secure the retirement incomes of their 7,600 members.

“This transaction demonstrates the ongoing commitment of Standard Life to the bulk purchase annuity market, and our ability to provide varied and flexible solutions to all sizes and types of schemes.

“We are pleased to welcome the schemes’ members to Standard Life.”

Gallaher Pension Scheme chair of the trustee and Law Debenture trustee director, Robert Thomas, added: “I’m delighted by the completion of this project to secure members’ benefits with Standard Life.

“The additional inflation provisions provide great long-term income protection for members in their retirement, which I am sure they will particularly value at this time of rising inflation.
“Standard Life were selected following a period of thorough preparation and a robust competitive tender process.”

Aon partner, John Baines, concluded: “Securing all benefits in a single transaction with significant benefits for all stakeholders of the scheme has been a monumental achievement.
“By preparing thoroughly in advance, including asset de-risking over a number of years and a carefully structured transaction process, the Trustee benefited from a fiercely competitive auction process.”

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