The trustees of the Mitchells & Butlers Executive Pension Plan (MABEPP) have agreed a full scheme buyout with Legal and General Assurance Society Limited, the group's latest annual accounts have revealed.

The buyout, completed in September 2024, converted the overall bulk annuity policy held by the trustees as an investment since 2021 into individual policies in members' own names.

This was agreed after a separate decision was made in August 2024 by the company to convert the buy-in policy into a buyout, which the group said was independent of, and not related to, the initial decision in December 2021 to purchase a buy-in policy.

The intention is for MABEPP to be wound-up over the course of the next twelve months.

The group said that both the main pension schemes of the group are now "substantially" de-risked, having previously agreed a £1.2bn buy-in for the Mitchells & Butlers Pension Plan (MABPP) with Standard Life, covering around 20,200 members.

The group's update also revealed that it reached an agreement to use any surplus arising in the main plan, the MABPP, to pay for employer contributions in the defined contribution (DC) section of that plan.

In light of this, DC members within MABEPP were moved across to MABPP, along with the remaining surplus funds from the MABEPP, prior to the the MABEPP buyout occurring in September 2024, to enable future employer contributions for them to be met out of the surplus in the MABPP.

This excluded £3m of of cash surplus which remained in MABEPP, and will instead transfer to MABPP on the wind up of the scheme.

Since this is a change in the trustee's agreed use of the MABPP surplus compared to previous years, the accounting surplus is being recognised in full in this year's accounts, with the full value of the surplus of £164m (including the £3m remaining within MABEPP until the wind up of the scheme) expected to be an economic benefit to the company.

According to the group, this economic benefit was determined over the future lifetime of the DC section of the plan, in particular on the basis that this section remains open to new members in its current form, and therefore will continue to remain active for the foreseeable future.

In total, the group had net pension asset as at 28 September 2024 of £139m, which
included £164m surplus in relation to MABEPP and MABPP, as well as a liability of £25m relating to the Mitchells & Butlers Executive Top-Up Scheme (MABETUS), which is closed and unfunded.

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