Sackers steers a £760 million bulk annuity deal for Smiths Group's pension scheme, with M&G insuring the remaining members of the FTSE 100 engineering group's scheme in its fifth and final buy-in
M&G, the FTSE-listed asset manager and insurer, has taken on £760 million (approximately $1 billion) of pension plan liabilities from the retirement savings programme sponsored by Smiths Group, a FTSE 100 engineering business. The transaction, known as a bulk annuity (or pension risk transfer), involves the pension scheme's liabilities being transferred to an insurer in exchange for a premium, meaning the insurer assumes responsibility for paying members' benefits rather than the employer's pension scheme. Sackers, the specialist pensions law firm, acted on the deal. Bulk annuity transactions of this scale are among the most complex in the UK pensions market, involving actuarial valuation of liabilities, regulatory interaction with The Pensions Regulator, trustee due diligence on the insurer's financial strength, and detailed legal documentation of the policy terms. The deal transfers longevity risk and investment risk away from the Smiths Group scheme and onto M&G's balance sheet, a structurally clean outcome for both the employer and the scheme's members. The UK bulk annuity market has been operating at record volumes in recent years as interest rate rises have improved pension scheme funding positions, making buy-ins and buyouts more affordable for sponsors. A buy-in means the policy is held as an asset of the pension fund, while a buyout means full legal discharge of the employer's pension obligations. The sources describe M&G as having taken on the liabilities, consistent with a buyout or substantial buy-in structure, though the precise legal form is not specified in the available source material.
Why this matters
The £760 million Smiths Group transaction reflects the ongoing boom in UK pension risk transfer (PRT) activity, driven by improved funding ratios following the interest rate rises of 2022 to 2024. For commercial law firms, PRT deals activate pensions law, insurance regulatory advice, and financial structuring work simultaneously. Sackers is a specialist pensions firm, but larger PRT deals typically involve Magic Circle and Silver Circle firms on the insurance regulatory and corporate sides. The interaction with The Pensions Regulator is a critical pathway: large buy-ins and buyouts require trustee governance sign-off and, in some cases, regulatory clearance. For law students, this transaction type is a useful illustration of how pensions work sits at the intersection of insurance law, trust law, and financial regulation rather than being a standalone niche.
On the Ground
A trainee on a pension risk transfer matter would assist with coordinating local counsel instruction letters if the scheme has international members, draft chronologies of the trustee approval process and regulatory interaction, and assist with preparing and cross-checking the legal opinion coordination schedule across the parties involved in the transaction.
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“What are the key legal steps involved in a bulk annuity transaction for a defined benefit pension scheme, and which regulatory bodies need to be engaged during the process?”
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