Legal & General has secured a buy-in arrangement with the ICI Pension Fund covering £3bn ($4.96) of pensioner liability, a deal it describes as the largest ever bulk annuity policy arranged by a pension scheme in the UK.

The liabilities covered by the policy are a subset of the fund’s pensioner population and were selected to ensure the optimum balance between risk reduction and economic value for the fund. Members will see no change to the way their pensions are paid, or the way in which the pension scheme is administered.

Implementation of the insurance arrangement is the culmination of a six month competitive tender process.

David Gee, chairman of trustees for the ICI Pension Fund said; “I am delighted that the trustee has achieved such a significant step in its strategy to further reduce risk in the fund. Members can be reassured that this will improve the security of their benefits by substantially reducing longevity risk.”

Heath Mottram, CEO of the ICI Pension Fund said, “Investment in these buy-in policies builds on the fund’s strong de-risking foundations. The transactions are the result of significant work by the trustee over the last six months including a thorough selection process and negotiation of competitive pricing and terms.”

Tom Ground, head of bulk annuities and longevity insurance at Legal General added, “Legal & General has worked closely with the trustee to develop a bespoke arrangement. This transaction further demonstrates Legal & General's ability to provide innovative bulk annuity solutions to large pension schemes.”

This transaction follows the approximately £8bn of pension scheme liability insured by Legal & General in 2013 across buy-ins, buy outs and longevity insurance as well as the acquisition of Lucida, a closed annuity buy out company with £1.4bn of annuity assets.