October 17, 2017 / 7:17 AM / a month ago

Pearson agrees deal to insure third of pension scheme risk

LONDON, Oct 17 (Reuters) - Publisher Pearson said on Tuesday it had agreed a deal to insure a third of its pension scheme liabilities totalling 1.2 billion pounds ($1.6 billion) with Legal & General and Aviva.

The deal “substantially reduces” the risk that Pearson would be unable to fund future retiree benefits and was agreed at no further cost to the company, it said in a nine-month trading update.

Under the so-called ‘buy-in bulk annuity’, the insurers take on some of the risk of the pension scheme, which remains with the company.

Aviva, which is focused on growing out its corporate pensions business, said in a separate statement the deal was the largest deal it had struck to-date.

“We’re continuing to see very strong demand for bulk annuity deals as more and more trustees look to find the right solution to manage their defined benefit pension schemes,” said Andy Briggs, Chief Executive Officer of Aviva UK Insurance.

Clive Wellsteed, partner at LCP and lead adviser to the trustees of the fund, said in a separate statement that the deal meant the industry was on track to pass 10 billion pounds worth of transactions for the fourth year running. ($1 = 0.7547 pounds) (Reporting by Simon Jessop and Carolyn Cohn; Editing by Mark Potter)

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