The transaction, completed with the Pension Insurance Corporation (PIC), was designed to align with a strategy imposed by the John Menzies Group, which owns Menzies Distribution, separating the aviation and distribution divisions, and therefore leading to the sectionalisation of the Menzies Pension Fund in May 2017.
Giles Wilson, chief financial officer at John Menzies, said: “The buy-out with PIC locks down risk today at less than the current funding shortfall, removing exposure to an unpredictable and volatile deficit. The policy has given certainty to the trustees regarding the level of support they require going forward from the sponsor.”
The pension scheme did not have sufficient assets to immediately buy out all of the DB pension benefits. Therefore, a bespoke structure was implemented, which will see the fund meet the shortfall to the cost of the buy-out through numerous future fixed instalments.
This personalised structure has allowed the pension arrangement to secure competitive pricing, remove the risk to members and confirm a buy-out earlier than the scheme’s trustees and sponsor expected.
Pensions and investment consultancy Hymans Robertson advised the trustees on the transaction, and legal advice was provided by Brodies.
Professor Ian Percy, CBE, chairman of trustee to the scheme, said: “The trustees are delighted to have secured this attractive policy with PIC, locking down risk in the scheme far earlier and for a lower cost than expected and significantly improving security for our members.
“Hymans Robertson identified an opportunity for the scheme to benefit from attractive market pricing and developed a bespoke solution with PIC that met the objectives of both the trustees and John Menzies. Hymans [Robertson] proactively led us through a well-run and innovative process, providing clear advice which allowed us to confidently make informed decision at every stage.”