Tate & Lyle shores up pension scheme with L&G deal

Sweeteners and starches maker Tate & Lyle has insured almost half its staff pension liabilities in a £347 million (€430 million) deal with life insurer Legal & General, the biggest such transaction in Britain this year.

Tate & Lyle’s pension scheme is paying L&G for a so-called bulk annuity policy that will generate income covering 43 per cent of its pension obligations, the two companies said on Friday.

Unforeseen increases in pensioners’ life spans, fuelled by medical advances and lifestyle changes, are threatening retirement schemes with extra costs just as volatile financial markets make it harder for them to generate secure retirement income for their members.

This has put pressure on pension schemes to pass on some of their pension liabilities to financially stronger banks and insurance companies, creating a booming pension risk transfer market.

L&G is one of the biggest players in that market in Britain, having done £480 million (€595 million) of bulk annuity business in the three months to September 30.