Citi Transfers £1.5bn EMI Pension Risk to Insurer

Citigroup has transferred responsibility for paying the pensions of 20,000 past and present employees of music group EMI to Pension Insurance Corporation (PIC) in a deal that relieves the bank of liabilities of up to £1.5bn.

Citi is the latest to insure against steadily improving lifespans which impose hefty extra costs on retirement funds. In a statement issued by Citi and PIC, the bank said it is paying the specialist insurer an undisclosed fee in the largest UK pension risk transfer to date, C

The deal is the biggest since Legal & General took on £1.1bn of pension liabilities from the T&N Retirement Benefits Scheme in 2011, according to data from Towers Watson, which advised the trustee for the EMI deal.

Citi took over EMI from UK financier Guy Hands in February 2011 after the private equity firm, Terra Firma Capital Partners, defaulted on its loans and was unable to support the company’s debt load

The bank subsequently sold EMI in pieces later that year, but retained the pension fund to help facilitate the other sales. The deal with PIC, known as a ‘buyout transaction’, means all members of the pension fund will receive their full pensions.

Citi is no longer responsible for finding extra funds to support scheme members who live longer than expected.

“I have written to the Fund members telling them that their benefits have been secured in full with PIC; as a trustee, fully securing benefits is the ultimate goal,” Clive Gilchrist of BESTrustees and chairman of the trustee company that manages the EMI pension scheme, said in a statement.

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