Co-operative Group partners with Rothesay Life for pension risk reduction

The Co-operative Group (Co-op) has embarked on a strategic initiative with Rothesay Life plc to reduce pension risks for its Co-op Section of the Co-operative Pension Scheme (Pace). This move comes as part of the Co-op’s continuous efforts to manage and minimize the financial risks associated with its pension commitments.

Key Details of the Buy-In Transaction

This collaborative effort has led to the agreement of a buy-in transaction where Pace has purchased a bulk annuity insurance policy from Rothesay Life. This policy covers all liabilities necessary to meet future pensions, ensuring greater security for members of the Co-op Section of Pace. Remarkably, this achievement was made without requiring additional contributions from Co-op, while still retaining residual assets within Pace.

Impact on Co-op’s Pension Scheme

The Co-op boasts a defined benefit pension net asset position. Through this transaction, a significant majority of the liabilities within this net asset position are now insured, marking a crucial step in the Co-op’s strategy of de-risking its pension exposure. The transaction will be reflected in Co-op’s year-end report and accounts for 2023. Importantly, the benefits of members of the Pace scheme remain unaffected by this transaction.

Benefits and Future Implications

This move demonstrates the Co-op’s support for the Trustee’s robust stewardship and de-risking actions, which ultimately benefit current and former colleagues who are Pace members. By reducing the Co-op’s exposure to funding risks associated with defined benefit liabilities, the transaction not only fortifies the pension scheme but also strengthens the Co-op overall, to the advantage of its members.

The Co-operative Group’s partnership with Rothesay Life plc represents a significant step in enhancing the financial stability and security of its pension scheme, aligning with the company’s broader strategy of risk management and fiscal responsibility.