Pension Insurance Corporation (PIC) has concluded a £300 million pension insurance buy-in with the VA Tech UK Pension Scheme and the captive reinsurer of parent company Siemens.
The pension scheme provides pensions for UK employees of the VA Tech Transmission and Distribution business, which was acquired by Siemens in 2006.
John Smith, head of pensions at Siemens, said: “Siemens is the sponsor of several defined benefit schemes in the UK. There is an overall aim to de-risk the schemes in the medium term. Siemens’s pension captive programme, in collaboration with PIC, is an important and innovative part of the de-risking strategies which works on a local level as well as at the Siemens group level.”
There are two tranches of pension liabilities insured. The first £100 million of liabilities was insured in 2013 by PIC, followed by £200 million in December 2015.
Trustees will benefit from the scheme by securing its liabilities with a UK insurance company.
The collaboration with the Siemens captive reinsurer, Risicom, means that a significant portion of the insured liabilities are reinsured by PIC to Risicom. It also enables Siemens to manage centrally pension risks and liabilities in different pension schemes through its captive reinsurer.
Finally, the transaction covers the liabilities of approximately 1500 scheme members and addresses any outstanding cross-border complications.
Eric Hurrell, chair of trustees at the VA Tech UK Pension Scheme, said: “This arrangement provides greater security for our members through PIC whilst facilitating Siemens’s broader strategy.”
Jay Shah, head of origination at PIC, said: “Multinational companies are taking a holistic view of their various pension liabilities across the globe as part of their efforts to de-risk and settle these liabilities. Siemens have taken this a step further in this innovative captive reinsurance arrangement. We are proud to have collaborated with Siemens in this transaction.”
