Marsh McLennan's UK Pension Fund Completes £1.9bn Bulk Purchase Annuity with Standard Life

The Sedgwick Section of the Marsh McLennan Companies (MMC) UK Pension Fund has completed a £1.9 billion bulk purchase annuity (BPA) buy-in transaction with Standard Life. This transaction secures the defined benefit pension obligations for approximately 6,500 members who were formerly employees of Sedgwick Group, acquired by Marsh McLennan in 1998. The buy-in includes the novation of three longevity swaps with major reinsurers including Canada Life Re, Munich Re, and The Prudential Insurance Company of America, previously held through Mercer ICC Limited, a Guernsey-based insurance captive.

Mercer, a Marsh McLennan business, acted as the lead broker and provided advisory support on risk transfer, actuarial, investment, insurer financial strength, and post-transaction management. Legal counsel was provided by Linklaters and Herbert Smith Freehills Kramer for the trustee and Marsh McLennan respectively, with Eversheds Sutherland advising Standard Life.

The trustee chair described the transaction as a significant milestone in the pension fund’s management, enhancing the financial security of member benefits through risk transfer to Standard Life. The selection of Standard Life followed a comprehensive market review, identifying the insurer as the most suitable partner for managing the fund’s liabilities both immediately and in the long term.

The transaction demonstrates the increasing use of bulk purchase annuities as a strategic tool in pension end-game solutions, allowing pension funds to de-risk by transferring longevity and investment risks to insurers. Mercer highlighted the importance of flexible strategies aligned with client objectives and regulatory guidance on end-game options.

This bulk annuity case reflects broader market trends in pension risk management within the UK defined benefit pension sector, including the role of specialist advisory firms, reinsurers, and legal experts in executing complex transactions. It illustrates the growing collaboration between trustees, sponsoring employers, insurers, and advisors to optimize pricing, risk mitigation, and operational efficiency in pension de-risking deals.