L&G completes third and final buyout with Nortel Networks UK Pension Plan

Written by Adam Cadle

28/05/2024

Legal & General (L&G) has completed its third and final buyout with the Nortel Networks UK Pension Plan.

This third transaction insures the final tranche of plan members’ benefits, and consists of a £14m initial premium followed by a £6m top-up on buyout. L&G has now insured £2.5bn of the plan’s liabilities.

The plan’s sponsor went into administration in 2009 and entered a Pension Protection Fund (PPF) assessment. While in assessment the plan was able to secure material additional funds from the Nortel insolvency process to improve member benefits. The plan agreed its first transaction with L&G in 2018 when it completed a £2.4bn buyout to secure the benefits in excess of PPF levels for members. The initial transaction included provision to secure additional benefits for members on receipt of further recoveries from the Nortel insolvency process, and was followed by a £105m buyout with Legal & General in 2021.

The trustee was advised on the transaction by Isio, with WTW acting as scheme actuary and legal advice was provided by Travers Smith and Pinsent Masons. PWC and Hogan Lovells provided advice regarding financial recoveries for the plan. Legal advice was provided to Legal & General by Clifford Chance.

Dominic Moret, head of origination and execution, UK PRT, Legal & General Retirement Institutional, said: “This transaction marks a significant milestone in the plan’s journey since 2009 and is testament to the work carried out by the trustee board and their advisers to secure funds from the insolvency process. The collaboration, flexibility and foresight shown by all parties enabled the plan to complete a ground-breaking initial transaction in 2018 with the ability to secure additional benefits through follow up transactions. We are proud to be providing financial security and certainty to plan members.

“These transactions serve as excellent examples of the positive role that insurers are playing in securing, protecting and delivering pensions in the UK.”

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