Leyland DAF pension scheme sold

Leyland DAF collapsed suddenly in 1993

The pension scheme of the former Leyland DAF truck company has been bought up by the Pension Corporation insurance company for £230m.

The deal transfers nearly 5,000 current and future pensioners to the insurer.

Leyland DAF, based in Birmingham and Lancashire, went bust in 1993 in one of the largest corporate insolvencies of the 1990s.

Aon Trust, which has been the trustee of the scheme since then, said the deal would make the pensions more secure.

"I believe that Pension Insurance Corporation offers the best opportunity for us to de-risk the pension scheme given the current market conditions, offering the best level of security for the members' benefits," said Oliver Rowlands of Aon Trust Corporation.

"I am therefore delighted that we were able to conclude the pension insurance buyout with them."

The scheme, a traditional final-salary pension fund, was closed to new members in 1994.

It now has 3,000 pensioners, as well as 1,700 deferred members who have yet to retire.

The Pension Corporation said the deal might reveal a surplus, which could lead to some improvement in the current level of benefits for the members.

Buy-outs

The insurer has become a leading force in the recent trend for employers to divest themselves of responsibility for paying some or all of their pension schemes by paying an insurance firm to take over that responsibility instead.

We look forward to completing further deals throughout 2009 Edmund Truell, Pension Corporation.

In December, it bought out the £1.1bn pension scheme of the former Thorn electrical and TV rental group, affecting 25,000 members.

Other similar deals by the Pensions Corporation and other insurers have involved the pension funds of P&O, Emap, Morgan Crucible, Telent (formerly Marconi), Friends Provident and Lonmin.

"We are pleased to have concluded our third pension insurance buyout in a very short period, including the largest ever, which involved the settlement of £1.1bn of pension liabilities," said Edmund Truell, chief executive of Pension Corporation.

"We look forward to completing further deals throughout 2009," he added.

The insurers that buy up pension schemes hope to make money by investing their funds more astutely than before and, over time, generating a surplus for themselves over and above the amount necessary to pay the pensions.

Last year, in order to ensure that scheme members did not get a raw deal, the government gave the Pensions Regulator the power to ensure that, if necessary, extra funds could be injected into the schemes by their new owners.