The Nationwide Pension Fund has completed a longevity risk transaction worth approximately £1.7bn with Zurich Assurance Ltd and Prudential Financial Inc (PFI).

The transfer covers Nationwide’s pension scheme liabilities of around 7,000 members in the UK, it was announced.

Under the transaction, the longevity risk of the pension scheme relating to these members will be passed through Zurich UK, to an insurance subsidiary of PFI as the reinsurer, with a limited recourse mechanism protecting Zurich UK against exposure under the transaction.

Catherine Redmond, chair of the fund’s trustee board and trustee executive for BESTrustees Limited, said: “This transaction is an important step in ensuring that members’ benefits are secured against unexpected increases in life expectancy. This is great news for the fund and its members, transferring risk and helping to further protect our members’ pensions.”

Rohit Mathur, head of international reinsurance for the retirement strategies business at PFI, added: “The recent rise in interest rates have resulted in improvements in pension plan funded status, accelerating de-risking plans for many sponsors. Pension trustees can consider a few different options to manage risk including a pension buy-out or a longevity risk transfer transaction.”

Greg Wenzerul, head of longevity risk transfer for Zurich UK, noted that in a rapidly changing pensions de-risking market, with increased pension scheme focus on leverage, longevity swaps continue to represent a “sophisticated and valuable de-risking approach”.

DWP publishes review of pension transfer regulations

The Department for Work and Pensions (DWP) has today published its review of The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, on their operation, appropriateness, and effectiveness.

The regulations created conditions which must be satisfied before a statutory transfer can take place, giving trustees and scheme managers power to act where they have concerns about a transfer.

They are intended to provide a safeguard against scams, whilst continuing to enable the majority of transfers to proceed without undue delay.

The regulations set out three interventions aimed at tackling different aspects of pension scams:

  • a ban on pensions cold calling;
  • limit the statutory right to transfer to some occupational pension schemes; and
  • making it harder for fraudsters to open pension schemes.

These regulations give providers the right to refer a customer for guidance, or even refuse a transfer if there are clear red flags. The vast majority of transfers should still go through with no issue but there have been industry concerns that the transfer process will be slower.

DWP said, however, that it will work with the pensions industry to consider if changes can be made to make the regulations work better.

NEST reappoints TCS for admin services

NEST, the UK’s largest pension scheme by members, has reappointed Tata Consultancy Services (TCS) as its scheme administration service provider.

Building on more than a decade of working together, NEST and TCS will focus on delivering a personalised service for the pension scheme’s 12 million members, the fund said.

Driven by data analytics and powered by recent technological advances, NEST and TCS will deliver seamless, self-directed, and consistent experiences that ensure members and employers alike can access the right information, at the right time, in the way that suits them best.

The new contract will last for 10 years with an optional extension period, it was disclosed.

Gavin Perera-Betts, NEST’s chief customer officer, said: “We have a strong foundation after many years working together [with TCS] and they’ve proven their ability to deliver successfully for a scheme the size and complexity of NEST. This puts us in an excellent position to further advance our operations and build a truly digital offering that delivers a superior customer experience long into the future.”

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