Lehman Brothers' UK pension scheme, Rothesay Life agree 675 million pound deal
LONDON (Reuters) - The British pension scheme of defunct U.S. bank Lehman Brothers has agreed a 675 million pound ($1 billion) "bulk annuity" deal to transfer the risk of the scheme to pensions insurer Rothesay Life, both parties said on Wednesday.
The growing bulk annuity market in Britain enables insurers to take on the risk of company defined benefit, or final salary, pension schemes.
Many of these schemes are in deficit due to weak investment returns as a result of low interest rates, and most are closed to new members.
Lehman Brothers collapsed in 2008, a major trigger for the global financial crisis.
"Since the bankruptcy of Lehman Brothers ... the trustees have been striving to secure the pension benefits promised to members of the scheme," Peter Gamester, chairman of the trustees of the scheme, said in a statement.
"The agreement with Rothesay Life achieves this goal, as it enables members' defined benefit entitlements to be paid in full."
The scheme had been subject to an "assessment period" following the bank's insolvency, the scheme's trustees and Rothesay Life said in the statement, and payments to current pensioners had been restricted.
The assessment period ends in July 2015, when benefits will be paid in full, including back payments, they added.
There are about 2,250 members in the scheme, according to deal advisers PwC.
($1 = 0.6615 pounds)
(Reporting by Carolyn Cohn; Additional reporting by Steven Slater; Editing by Pravin Char)
