Boots inks £4.8 billion pension deal with Legal & General

The transaction is the UK’s largest of its kind, the companies said.

Pharmacy chain Boots said it has secured the benefits of its pension scheme by transferring 53,000 members to Legal & General in what the companies said is the biggest deal of its kind (PA) (PA Archive)

Pharmacy chain Boots said it has secured the benefits of its pension scheme by transferring 53,000 members to Legal & General (L&G) in what the companies said is the biggest deal of its kind.

The £4.8 billion buy-in will leave it up to L&G to pay members’ pensions directly to them, winding up the old Boots pension scheme, it said.

The company said it explored “a range” of options and this is “the best way to safeguard members’ benefit against market uncertainty, improved life expectancies and other risks”.

Boots will bring forward around £170 million of payments into the scheme it had already committed to and add a further £500 million, it said.

This will provide greater certainty to both the scheme members and to Boots and is an excellent outcome for both parties.

Sebastian James, Boots' managing director

Its parent company, the Walgreens Boots Alliance, had previously agreed to guarantee the scheme. This agreement has been terminated and replaced with a smaller, temporary guarantee.

The process of moving the members to L&G will take up to two years, the business said. L&G will then shoulder most of the scheme’s economic risk.

Boots said this will reduce its exposure but also make members’ pensions safer.

Alan Baker,  chairman of trustees at the Boots Pension Scheme, said: “This agreement with Legal & General gives added protection to our members’ long-term benefits by removing market uncertainty and other financial exposures.

“We welcome the additional payment from Boots, in addition to the sum it has already committed.

“As a result, the scheme will not be reliant on Boots to pay benefits to members and pensions will be protected for decades to come.”

Boots managing director Sebastian James said: “We are very pleased to have achieved the gold standard outcome for our pension scheme and to have fully secured the benefits of all members with a highly respected insurer.

“This will provide greater certainty to both the scheme members and to Boots and is an excellent outcome for both parties.”