The sell-off of a workplace scheme comes in order to cover the communications firm against future pension payments.
Cable & Wireless (C&W) has become the latest large firm to sell off its workplace retirement savings scheme.
The telecoms firm has sealed the deal through the purchase of a £1 billion annuity from insurance giant Prudential, covering its entire C&W Superannuation Fund. The move was made in order to cover the company against the costs of the scheme underperforming, by guaranteeing future payments to members.
Around 5,000 pensioners are covered by the sold-off fund, which has been closed to new business. Around half of the assets previously held in the fund were used to purchase the annuity, with the remaining £1 billion to be used to pay the remaining 10,000 members who have yet to retire.
Talking to the BBC, a C&W spokesman said: "We have wanted to de-risk the scheme for a while and we were offered very good terms,"
Lane, Clark & Peacock actuarial expert Jonathan Camfield added: "It's a win-win situation for the pensioners. They are still within the pension fund, and have its full support, and on top of that they have the additional security from the Pru."
The selling-off of workplace savings schemes to large insurers has increased in popularity over the past year, with the onset of the credit crunch. This is, in part, because one of the effects of the financial crisis has been increased volatility in the equities markets, in which many pension schemes are heavily invested.
