Macfarlane cuts pension balance-sheet risk with £53m Royal London buy-in

Macfarlane Group said the Macfarlane Group PLC Pension & Life Assurance Scheme (1974) had completed a £53m buy-in with Royal London, fully insuring the scheme’s financial and demographic risks, apart from post-buy-in adjustments. The transaction was announced on 30 June, and the policy will pay a regular income stream matching the scheme’s pension obligations.

Macfarlane Group said the scheme is currently in surplus and that the listed company is not required to make any cash contributions. Subject to post-buy-in data reconciliations and adjustments, Macfarlane Group and the trustees can move to a full buy-out and wind-up, which are expected within two years, at which point the scheme would come off Macfarlane Group’s balance sheet.

The remaining balance-sheet exposure appears limited. Macfarlane Group said any surplus left at buy-out would be returned to the company after tax, while any deficit would require a matching cash contribution, and it expects either outcome to be no more than £1m. Macfarlane Group also said it has no other defined benefit schemes.

The buy-in does not change member benefits, and pensions will continue to be paid monthly in the usual way. Royal London describes itself as the UK’s largest mutual life, pensions and investment company. Publicly available details did not confirm the specific capital effects of the transaction.

--- Sources: https://www.londonstockexchange.com/news-article/MACF/defined-benefit-pension-scheme-buy-in/17663299