4th Dec 2018 09:01
LONDON (Alliance News) - Pest control group Rentokil Initial PLC said on Tuesday it has agreed to a bulk annuity insurance buy-in for the Rentokil Initial 2015 Scheme with the Pension Insurance Corp.
Agreed between Rentokil, the trustee of the scheme and the PIC, the agreement will secure the benefits of scheme members, providing security for its 14,200 members, as it is hedged against longevity, interest rate and inflation risks.
The scheme currently has liabilities of GBP1.5 billion.
The buy-in, which provides a hedge against these liabilities, was secured in expectation of a full buy-out of the scheme, which will remove all future pension liabilities from Rentokil's balance sheet, resulting in a small cash surplus being returned to the group.
Throughout the buy-out process, members of the scheme will be granted individual annuity policies with PIC, who will then become responsible for paying out benefits in full, providing security for their pension benefits for the future.
The buy-out is expected to be completed in 2020 with no company cash payments being necessary to do so, Rentokil said.
"This transaction is a fantastic outcome for our pensioners, the company and our shareholders. We have supported the scheme over many decades and over that period made significant cash contributions to remedy a deficit that has existed between the scheme's assets and liabilities," said Rentokil Chief Executive Andy Ransom.
"That funding, combined with excellent stewardship by the scheme's trustees, and the high-quality support of the advisers to the company and the trustee, has resulted in a very positive situation whereby the scheme can now be transferred to an A+ rated insurance company, PIC," Ransom added.
Shares in Rentokil Initial were up 1.0% at 341.00 pence on Tuesday.
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