Pure Beauty

Boots signs £4.8 billion deal with Legal & General to offload pension scheme

By Amanda Pauley | Published: 24-Nov-2023

The transfer to the investment firm could see parent company Walgreens Boots Alliance open up a new sales bid for the UK beauty retailer

Boots has inked a deal to switch the liabilities for its company pension scheme to Legal & General (L&G). 

The UK beauty and health retailer, which is the Trustee of the Boots Pension Scheme, has secured a £4.8bn (US$6bn) buy-in policy with the investment firm.

It will see L&G pay all 53,000 members pensions directly to them, winding up the old Boots pension scheme.

Offloading the pension responsibilities could reinvigorate Boots’ parent company Walgreens Boots Alliance plans to sell the UK beauty retailer.

The American company abandoned its first sales bid process for Boots last year, citing “unexpected and dramatic” changes in market conditions as key reasons.

The pension liabilities issue was rumoured to be a deterrent to the private equity firms that were previously eyeing up buying the UK retailer. 

The new L&G buy-in deal is said to give protection to Boots members’ long term benefits.

“By removing market uncertainty and other financial exposures,” said Alan Baker, Chair of Trustee at Boots’ Pension Scheme. 

Boots will bring forward approximately £170m of already committed payments to the scheme and has committed to add an extra £500m. 

It is “the largest single transaction of its kind”, said the companies in a joint statement.

The process of moving Boots’ pension members to L&G will take up to two years. 

Boots’ parent company Walgreens Boots Alliance had previously agreed to guarantee the scheme but this has been terminated and replaced with a smaller, temporary guarantee.

Both the Trustee and Boots have contacted members to inform them of the changes. 

Sebastian James, Senior VP and MD of Boots, said the agreement with L&G is a “gold standard outcome” for the company’s pension scheme. 

“This will provide greater certainty to both the scheme members and to Boots, and is an excellent outcome for both parties.”

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