Tate & Lyle Plc- Full Pension Scheme Buy-In with Legal & General
Agreement will deliver security for UK Scheme members while removing future risk
for Tate & Lyle and saving £20 million of annual contributions
19 September, 2019, London, UK: Tate & Lyle PLC ("the Company") and the Trustee of the Tate & Lyle Group Pension Scheme ("the Scheme"), the Group's UK pension scheme, today announce an agreement for a £930 million bulk annuity insurance 'buy-in' with Legal & General Assurance Society Limited ("Legal & General"). The agreement provides certainty and security for the Scheme's affected members.
The buy-in secures an insurance asset from Legal & General that fully1 matches the remaining pension liabilities of the Scheme, with the result that the Company no longer bears any investment, longevity, interest rate or inflation risk in respect of the Scheme. Under the transaction, the Company will not contribute any incremental funding into the Scheme1.
The agreement is not anticipated to impact profit before tax for the year ending 31 March 2020 but will eliminate non-cash net finance income on the UK scheme accounting surplus2 from the 2021 financial year. De-recognition of the accounting surplus will result in a decrease in Group net equity by around £180 million.
Imran Nawaz, Chief Financial Officer of Tate & Lyle PLC, said:
"This transaction represents a good outcome for our UK scheme members, the Company and our shareholders. We have supported the Scheme over many decades and made significant cash contributions to remedy a deficit that has existed between the Scheme's assets and liabilities. That funding, combined with excellent stewardship by the Scheme's trustees, has meant that the Scheme can now be de-risked for the benefit of members and the Company.
"Importantly, cash contributions into the Scheme will cease, saving around £20 million of cash annually from the 2021 financial year1, allowing the Company to focus our future investments on delivering profitable growth."
Michael Chatterton, Chairman of Trustees of the Scheme, said:
"This is great news for Scheme members. After many years of funding from Tate & Lyle and careful management, working together in close partnership with the Company, we have now secured our members' benefits through Legal & General. As a result, our members can continue to look forward to enjoying retirement knowing that their pensions are secure."