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Merchant Navy pension fund frets over future of Old Section

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  • Merchant Navy pension fund frets over future of Old Section

UK - The head of the UK's Merchant Navy Officers' Pension Fund (MNOPF) has branded as "gut-wrenching" a mooted buyout and wind-up of the £3.3bn (€3.7bn) scheme's Old Section.

Speaking at the National Association of Pension Funds' annual conference in Liverpool, Andrew Waring said he "can't comment and won't comment" on such a decision by the fund's trustee being imminent.

His comments come after the MNOPF hosted a series of forums across the UK and contacted members of its Old Section - closed to new members since 1978 and subject to two separate buy-ins in 2009 and 2010 - informing them that the fund was "working to extend" the existing buy-in arrangement.

The letter seen by IPE in September did not explicitly state whether the proposed policy would be offered by Lucida, responsible for the £600m previously insured liabilities.

But it did say that, "given the right circumstances", a further policy could be in place by the autumn - allowing the Old Section to be wound up "in due course".

Waring told the NAPF conference yesterday that the fund was now "in a position to settle the liabilities" due to the section funding currently being 101-102% funded to an insurer.

However, the chief executive said in response to a question from IPE that "all sorts of wider issues" needed to be considered prior to a settlement being reached.

"Maybe the Merchant Navy Officers' Pension Scheme is a little bit unusual, but there is a very strong bond and affinity with our officers," he said.

"It's a bit of a club, it's something they like belonging to and they don't want to belong to an insurer and all of that that comes with it.

"It's intangible, it's hard to put a promise on that, but it's something that weighs heavily on the trustee's mind - how you can deliver the security of trying to protect some of the softer benefits that members value."

Waring said any decision to complete further buy-ins or enact a complete buyout would not be purely financial.

"When you get to this stage, it's a gut-wrenching decision that the trustee will have to take in this regard," he said.

"But [a buyout and wind-up] is something we are looking at, yes, and whether a transaction is imminent, I can't say, can't comment and won't comment."

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