UK roundup: Watson Petroleum, PIC, NEST, BarraOne, JLT
The Watson Petroleum Limited Retirement Benefits Scheme has transferred its £30m (€40.5m) worth of liabilities to Pension Insurance Corporation (PIC).
The insurance buyout, conducted after the scheme’s sponsor was sold last year, means PIC will now take responsibility for the remaining liabilities.
The fund will be wound up.
Andrew Barnett, trustee to the scheme, said the recent corporate changes meant the board had to work closely with its new sponsors to ensure benefits were secure.
In June, LCP estimated the UK bulk annuity market at £4.4bn, led by Prudential and Legal & General, with more than £1.1bn each.
PIC amassed £681m in the first half of the year, compared with £1.8bn in 2014.
In other news, the National Employment Savings Trust (NEST) reappointed BarraOne as its investment risk-management system provider on another five-year contract.
BarraOne, owned by MSCI, was appointed in 2011 in line with public sector tendering requirements, meaning the contract was re-negotiated and will commence next year for an additional five years.
NEST said BarraOna provides the government-backed defined contribution master trust with information on its risk exposure at the security and portfolio levels.
Lastly, research from consultancy JLT Employee Benefits places the value of UK private sector defined benefit (DB) deficits at £247bn, as of the end of September.
This is an increase of £40bn over the year, JLT said.
Deficits among FTSE 100 schemes came to £73bn, down from £82bn two months’ previous, giving an average funding level of 88%.
Charles Cowling, director at JLT Employee Benefits, said the volatility stemming from the US Federal Reserve’s decision to maintain low interest rates had done nothing to boost pension scheme hopes of reducing deficits.
“It is not surprising to see deficits jumping by £40bn,” he said.
“With just under half of DB pension assets still invested in equities, pension schemes are exposed to a huge amount of market volatility, potentially leading to big losses that can further widen the deficit gap.”