Sanofi, Legal & General Complete $1.74B Annuity Buy-In

Legal & General Assurance Society Ltd. announced Tuesday that the insurer had completed a 1.4-billion-pound ($1.74 billion) annuity buy-in transaction with the Sanofi Pension Scheme, the pharmaceutical company’s U.K. defined benefit plan.

The transaction, the scheme’s second with L&G, will cover the benefits of 4,900 retirees and 5,600 deferred members. The companies completed a 760-million-pound partial buy-in in 2021. With this transaction, all beneficiaries of the plan are now insured through Legal & General.

The pension fund’s sponsoring employer is Aventis Pharma Ltd., part of Sanofi S.A., a French multinational pharmaceutical and health care company.

The Sanofi pension has been a longtime client of L&G, according to a news release: The insurer’s asset management division has managed plan assets since 1999.

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Last year was a record year for pension risk transfer transaction volume. Most estimates put U.K. PRT volume at about 40 billion pounds, a figure that could be met or exceeded in 2025, as an increasing number of plans offload liabilities to insurers.

Pension consultant Lane Clark & Peacock expects 40 billion to 50 billion pounds of annuity buy-in transactions to occur this year for the third year in a row. LCP also expects more than 300 such transactions for the first time. Legal & General predicts 50 billion to 65 billion pounds of PRT volume annually from 2024 to 2028.

Legal & General completed 10.5 billion pounds of PRT transactions last year, according to the firm’s institutional retirement deep dive. That included four transactions worth more than one billion pounds each that closed in the second half of the year. L&G also noted that in 2024, the firm recorded its highest PRT volumes in Canada and the U.S.

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Tags: Legal & General Assurance Society Ltd., Legal & General Investment Management (LGIM), Pension Risk Transfer, Sanofi

A majority of U.K. pension funds have a funding surplus; 75% of them to be exact, according to the U.K. treasury. Their total represents more than 160 billion pounds ($199.08 billion) in surplus assets, but for U.K. plans, it is often difficult to access these surpluses.

Chancellor of the Exchequer Rachel Reeves and Prime Minister Keir Starmer on Tuesday unveiled reforms that would make it easier for pension funds to invest their surplus assets in a roundtable discussion with CEOs.

According to a statement from the Treasury, if the trustees of a plan agree to share a portion of the surplus with an employer, the employer could use the funds in their core business, including purchasing equipment and supplies, as well as providing additional benefits to beneficiaries.

Details of the surplus policy will be released in the spring, according to the Treasury.

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Currently, defined benefit plans can only access surplus assets if the plan had passed a resolution to do so by 2016, so not all plans in the U.K. are currently able to do so, even if trustees and sponsors both agree. Sections 37 and 76 of the Pensions Act 1995 and Section 251 of the Pension Act 2004 regulate surplus extraction.

“Unlocking surplus capital from defined benefit schemes has the potential to both boost UK growth by opening up investment opportunities for companies and their stakeholders, as well as the possibility of higher pensions for scheme members,” said Jonathan Lipkin, director of policy, strategy and innovation at the Investment Association, in a statement. “With around £1.1 trillion in assets, defined benefit schemes already make a significant contribution to the funding of the UK economy and public services.”

Reeves has sought significant pension reform in the U.K. and sees the country’s pension system as a potential driver of increased economic growth and activity. Reeves has also proposed the consolidation of small, local government schemes into larger “megafunds,” which could invest more like a larger institutional investor.

Reeves has often pointed for inspiration to the Canadian “Maple 8” public pension funds, the eight largest Canadian pension funds which operate with significant independence from the government, manage a significant share of assets internally and are known for strong governance. The Canadian funds are known for their significant investments in real assets and infrastructure, classes in which Reeves has called for more domestic U.K. investment.