PensCorp to deliver Leyland DAF buyout
UK - The £230m (€253m) pension fund of the former UK commercial vehicle manufacturer Leyland DAF has tapped Pension Insurance Corporation (PIC) to buyout its pension liabilities.
The scheme, which has almost 5000 members, appointed Aon Trust Corporation as independent trustee in 1993, and was closed to new members in the following year.
PIC said in a statement today the fund has in recent years secured "substantial benefits with the state pension scheme and commenced winding-up".
It added: "Recently the Trustee concluded that pension buyout offered the best way of de-risking the scheme given the current market conditions and for the long term."
Hewitt advised Aon Trust Corporation on the buyout and provided scheme actuary services. KPMG provided advice on the scheme's investment strategy.
PIC also said the trustee will assess the level of surplus and considering how best it can be used by the scheme members, including the amount of any benefit improvements, as part of the winding-up process.
Leyland DAF was formed in 1987 when the Leyland Trucks division, including the Freight Rover van making interests, of the British Rover Group merged with the Dutch DAF Trucks company.
The sponsoring company finally went into liquidation in July 1996.
Parties surrounding the ‘old' DAF company in the Netherlands finally decided last year the Dutch pension scheme should get €5.6m from the company's remaining estate.
The news comes as consultant company Watson Wyatt said it expects to see a significant acceleration in the number of defined benefit (DB) pension schemes in the UK closing to future accrual during 2009.
Its own research into the views of over 160 company and trustee representatives suggested around a quarter of DB schemes already closed to new entrants but open to future accrual for existing members - which describes the majority of DB schemes in the UK today - expect to close to future accrual within three years.
"It is a trend that is likely to pick up this year," said John Ball, head of defined benefit consulting at Watson Wyatt.
"Resistance from employees, unions and trustees is likely to be lower in an economic downturn, especially if presented as an alternative to job cuts. If a few more household name companies take this step, there could be a snowball effect," he added.
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