Boots transfers £4.8 Billion Pension Plan to Legal & General

Boots also brings in an additional payment of around £500m to the scheme

Walgreens Boots Alliance (WBA), which owns the retail pharmacy chain Boots in the UK, has signed a buy-in deal with financial services company Legal & General, transferring its £4.8 billion ($6 billion) pension plan to the latter.

In a release issued on Friday, the company said that the deal is the “largest single transaction of its kind,” in the UK and insures all 53,000 members in the Boots Pension Scheme.

The company said it was the best options to “safeguard members’ benefit against market uncertainty, improved life expectancies and other risks”.

Boots is also bringing in an additional payment of around £500m to the scheme, in addition to the sum (£170m) it has already committed.

Boots Pension Scheme trustee chair Alan Baker is optimistic that this agreement with Legal & General will give “added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures.”

"The scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come," he added.

L&G will assume the responsibility for issuing individual annuity policies to scheme members and paying benefits directly to them.

However, the business said will take up to two years to complete the process of moving the members, after which it will bear most of the scheme’s economic risk.

Boots UK managing director Seb James commented that they “have fully secured the benefits of all members with a highly respected insurer” and this will provide “greater certainty to both the scheme members and to Boots and is an excellent outcome for both parties."

Describing the deal as their “largest ever single transaction”, Legal & General CEO Kail said it was a proof to their “long-standing relationship with the client.

Earlier, the WBA had agreed to guarantee the scheme but the agreement has been terminated and replaced with a smaller, temporary guarantee.