17th Sep 2014 13:20
LONDON (Alliance News) - 4imprint Group PLC Wednesday said the trustee of its pension scheme has entered a buy-in deal with Prudential Retirement Income Ltd, a subsidiary of The Prudential Assurance Company Ltd.
The deal will produce an income stream for the scheme, which covers payments to 567 existing pensioners, representing around 57% of the scheme's liabilty.
In a statement, 4imprint said the deal, together with the previous buy-in deal announced in November 201,3 means around 76% of the scheme's liability is now insured.
Buy-in deals like this eliminate inflation, interest rate and longevity risks associated with the pension benefits that are insured.
The insurance premium under the buy-in agreement is GBP65.5 million, 4imprint said. It has been funded by way of GBP51.8 million of assets from the scheme and GBP13.7 million paid by the company in cash. This increases contributions by the company to the scheme in 2013 to GBP16.2 million.
Under the terms of the deal, the scheme trustee has the option to convert the deal to a buy-out arrangement, which would result in the insurance company being directly responsible for the pension obligations. 4imprint said the trustee of the scheme has indicated that it is targeting 2015 to do so. In this case, 4imprint would make an additional GBP6.0 million contribution to the scheme.
Chairman John Poulter said the buy-in is in line with 4imprint's strategy of reducing the risk of its legacy pension scheme.
4imprint shares were up 0.6% at 750.47 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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