Deal flow Q3 2024
The 39 UK corporate pension funds surveyed in the third quarter of 2023 continued to prioritise end-game strategies, particularly buy-in deals. Meanwhile, pension consolidators ramped up their private market activity, establishing long-term asset funds in response to government drives for greater private market investment. MandateWire reported on 12 buy-in deals worth a collective $5.5bn completed in Q3, an increase on the $4.5bn recorded in Q2. The uptick in volumes can be attributed to three billiondollar deals, the largest of which was concluded by the £1.6bn ($2.1bn) Coats UK Pension Scheme. In September, it announced it had agreed a £1.3bn ($1.7bn) buy-in with Pension Insurance Corporation, securing the liabilities of more than 18,000 scheme members. The deal followed a £350mn ($468.2mn) buy-in with Aviva in 2022, which covered 3,700 pensioners’ benefits. PIC also completed a £1.2bn ($1.6bn) deal with the Total Energies Pension Plan, its second with the pension plan following a £1.6bn ($2.1bn) contract inked in 2014. The third of the billion-dollar transactions was a £1.1bn ($1.5bn) contract between the SCA UK Pension Plan and Legal & General. Despite the quarter-on-quarter increase in transaction volume, the number of bulk insurance deals completed in Q3 (12) was below the 16 recorded in Q2. That drop in deals coincided with greater discussion around scheme run-on. Keep on running According to the Pension Protection Fund, the aggregate surplus (total assets less s179 liabilities) of the schemes in the PPF 7800 Index* was estimated to be £476bn at the end of September 2024. The position was an improvement from a year earlier, when a surplus of £424.8bn was recorded, and a vast improvement on the £117.6bn deficit recorded five years earlier. Hymans Robertson’s Calum Cooper told MandateWire Analysis in July that funding levels have transformed so significantly that the median closed defined benefit pension scheme can now afford to transfer to an insurer, but for funds of significant scale, he expects around half to opt for run-on.
