Legal & General Assurance Society (“LGAS”) today announces that it has agreed a c.£400m Assured Payment Policy (APP) transaction with the Legal & General Group UK Senior Pension Scheme (the “Scheme”).
The innovative de-risking transaction provides investment risk protection for the pensions of around 200 deferred members and 385 pensioner members. Completed in December 2020, it follows Legal & General’s previous £250m APP transaction with the AIB Group UK Pension Scheme in late 2019.
Legal & General’s APP solution provides pension schemes with an efficient and precise method of liability cashflow matching, selectively insuring against investment related risks such as changes in asset yields, interest rates and inflation. In this case, the product’s flexibility allowed for the transaction to be structured around the Scheme’s existing buy-in arrangements, creating a highly tailored de-risking outcome. By insuring against the selected risks, it also provides enhanced certainty for the Scheme of reaching buyout within its planned timeframe.
The Trustee was advised on the transaction by LCP, Redington, Gowling WLG and Premier Pensions. Legal advice was provided to Legal & General by Clifford Chance.
Frankie Borrell, Head of Client Solutions, Legal & General Retirement Institutional
“We are delighted to have delivered improved certainty for the trustees and members of our Legal & General Group UK Senior Pension Scheme. We look forward to working with the Trustee in the years ahead as they progress towards their ultimate goal of full pension scheme buyout.
“Our innovative APP solution allows pension schemes to lock down investment and inflation risk on attractive terms, with the ability to then add longevity and wider demographic risk protection in the future through conversion to a bulk annuity. With the market volatility that we’ve observed over 2020 we expect to see continued interest in solutions which create greater certainty for pension schemes earlier in their de-risking journey.”
CONTINUED INVESTMENT IN SOCIAL HOUSING PROJECTS
From the L&G press office;
Legal & General continues to expand its Build to Rent (BTR) offer as it announces, on behalf of its Build to Rent Fund (BTR Fund) and Access Development Partnership (a joint venture between Legal & General Capital and PGGM), that it has agreed to the funding of a £57 million development site at Tower Works in Leeds City Centre.
This investment follows the £100 million investment to develop Hockley Mills, a 400 apartment scheme in Birmingham.
Leeds is one of the UK’s largest cities in terms of population and economic output, yet supply of housing in the city centre has been severely constrained over the past decade. Current housing stock is unable to meet the growing demand for rental accommodation. Recognising the prospect for rental growth in Leeds, Legal & General has acquired two BTR sites in the city centre; Mustard Wharf in 2017, and now Tower Works. Both sites are central to the landmark South Bank regeneration area, and together will deliver 500 homes, offering one, two and three bedroom apartments, alongside over 16,000 sq. ft. of commercial space.
In the last few years, the BTR sector has really come into its own. It has cemented its position in the UK as an asset class and is successfully evolving away from the private rented sector. Following Legal & General’s first investment in the sector in 2016, its BTR business has grown rapidly. Today, it has committed over £2 billion in the sector, with nearly 2,000 operational apartments and a pipeline to deliver a further 7,000 apartments by 2025.
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