NatWest in £11bn deal to offload pension payments | News about money

NatWest Group, the high street banking group, has completed what is believed to be the UK’s biggest ever deal to outsource pension payments to a specialist insurance company.

Sky News has learned that pension administrators at NatWest, which is set to become wholly owned by private sector investors after more than 15 years in part taxpayer ownership, have transferred a chunk of around £11bn of corporate pension scheme to Rothesay, England cricket. Test match team sponsor.

The deal is a landmark in the accelerating trend for companies to insure their pension risks, with NatWest among the biggest sponsors of pension schemes in the UK.

Its group pension scheme has around £33.6 billion in assets, while it had around 190,000 members at the end of September.

The latest deal was revealed – without reference to Rothesay – in NatWest’s third-quarter results statement published last month, but was not reported publicly.

“In September 2024, the Pension Fund administrator NatWest Group entered into a new buy-in transaction with a third-party insurer for some of the obligations of the Main Section,” it said.

Several people familiar with the transactions said the counterparty was Rothesay, which declined to comment on Tuesday.

In a statement to Sky News, a spokesperson for pension fund NatWest Group confirmed the deal, saying: “As part of its long-term strategy, the administrator of NatWest Group Pension Fund has recently secured around a third of the Policy Section of acceptance.

“Buy-in policies are Fund investments that further enhance the security of member benefits by increasing protection against demographic and investment risks.

“As with other investment decisions, there is no change to member benefits and members will continue to receive their benefits directly from the Fund.”

A wave of UK and overseas multinationals have completed pension risk transfer (PRT) transactions over the past decade, turning the market into one of the fastest growing areas of specialist funding.

RSA, the insurance company that was wound up and sold to several new owners, was behind the largest series of PRT deals, with £6.5 billion of insured pension liabilities.

The biggest single deal was with Boots, which announced a £4.8bn deal to buy Legal & General a year ago.

A host of other companies, from Co-operative Bank and De Beers to National Grid and Rolls-Royce Holdings, have turned to PRT transactions to more effectively manage the risks associated with their pension schemes.

Other big players in the market include Pension Insurance Corporation and Standard Life, which is owned by the Phoenix Group, while Aviva and Royal London have also looked to make inroads into the sector.