The Royal Mencap Society, a charity for people with learning disabilities, has completed a £61m (€75m) bulk annuity transaction for its pension plan, covering 710 members. This is the Mencap Pension plan’s first bulk annuity transaction, it was announced.
Following a one-round appointment process the scheme was able to benefit from Canada Life and Aon’s streamlined internal legal process. These efficiencies secured competitive pricing for the pension scheme, it said.
The Mencap Pension Plan was advised by Aon and received transaction legal advice from Eversheds Sutherland.
Sally Pococke, chair of trustees, said: “The trustee board are delighted we have taken this step; it is a significant achievement in our strategy to continually reduce risk and improve the security of our members’ benefits.”
She added: “The trustees appreciated the guidance and experience provided by the Aon team which enabled us to have open and constructive dialogue with Royal Mencap Society as we moved through the process.”
Nick Flynn, director of retirement income at Canada Life, said: “The close collaboration and team-work of all parties means we have been able to secure excellent terms for the scheme and I am incredibly proud to have played a part in securing the benefits for Mencap’s pension plan members.”
Joe Hathaway, senior consultant at Aon, noted that the firm was able to capture a strong price opportunity for the Mencap Plan, adding that the firm’s Pathway process and use of pre-negotiated contracts were fundamental in allowing the fund to move quickly and to complete the transaction.
Firefighters agree pension MoU with government
The Fire Brigades Union and the UK government have agreed a memorandum of understanding (MoU) that will allow retained firefighters to receive their pension entitlement going back to earlier in their careers, with their pension based on their modified scheme.
Previously, only employment dating back to the introduction of the Part Time Worker Regulations, on 1 July 2000, was counted for the purposes of retained – on-call, or part-time – firefighters’ pension entitlements.
However, in a similar case involving a Judge’s employment (O’Brien v Ministry of Justice, November 2018) it was ruled that a scheme similar to this one discriminated against older workers, who would be more affected by this limitation.
As a result of this case retained firefighters will now have the opportunity for their employment to be made pensionable much earlier in their careers. The ruling also included retained firefighters who have transferred to full time.
The MoU, which has been made public yesterday after having been under negotiation for some time, will facilitate this taking place.
Mark Rowe, national officer at the Fire Brigades Union, said: “This is very good news for retained firefighters who will now be provided the opportunity to have previous employment as a retained firefighter count towards their pension, under the conditions of the Second Options Exercise Memorandum of Understanding.”
He said that some retained firefighters were previously losing out, so he’s “delighted to successfully conclude these negotiations for our members”.
He added that the government has been “proved wrong time and time again when it comes to pensions, and we will continue to fight for justice for all of our members”.
PIC invests in affordable housing
Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension schemes, is making an £83m investment in partnership with the London Borough of Newham to fund the construction of 161 homes, as part of the borough’s housing strategy, which seeks to actively manage the financial and social implications of the area’s housing shortfall.
The investment will fund the regeneration of a brownfield, industrial site near London City Airport to permanently re-home local families, with up to 50% of the properties intended to be affordable housing, generating considerable social value. Reef Group is the developer.
The project is a key part of Newham’s housing strategy, through which it plans to acquire a large scale development to provide much needed affordable homes. The strategy, it said, will not only provide secure, good quality housing for residents currently in temporary accommodation, but also provide the borough with a rental income which helps address its overall funding shortfall.
Newham will have the option to purchase the properties for £1 at the end of a 50-year lease.
This regeneration lease structure provides PIC with long-term, inflation-linked cashflows which will be used to pay the pensions of its policyholders over coming decades.
Councillor Terence Paul, lead member for finance and corporate services at Newham Council, said: “Closing this transaction with PIC allows us to move ahead with this key policy initiative. We are delighted to have PIC working with us on this project as they have the expertise and the focus to make the project a success over the coming decades, bringing considerable social value to the Borough.”
Projects funded using the regeneration lease model offer benefits to all stakeholders throughout their lifecycle, for example through increased employment and significant spend in the local economy in the short-term during construction.
This transaction builds on PIC’s recent £130m investment, also through a regeneration lease, in the UK’s largest urban regeneration development, Wirral Waters One, as well as a £67m debt investment PIC made with the London Borough of Bromley in August 2021.
PIC expects to invest £30bn in productive finance projects by 2030, but as its recent analysis of the current review of the Solvency II regulatory framework made clear, this figure could rise to £50bn with appropriate, timely reform.
PPF sees drop in ethnicity pay gap
The Pension Protection Fund (PPF) has today announced in its Diversity Pay Gap Report 2021 that efforts to increase ethnic minority representation across the business have resulted in a positive drop in their ethnicity pay gap.
At 31 March 2021, the PPF’s second ever ethnicity pay gap decreased from 23.15% in 2020 to 15.6%.
Katherine Easter, PPF’s chief people officer, said: “We’re absolutely committed to making the PPF a fair and inclusive place to work, and an important part of this is monitoring our pay gaps to ensure we understand what is preventing our pay gaps being zero. This is why we continue to go above and beyond our statutory obligations and report our ethnicity pay gap.”
She noted that the PPF’s efforts to improve representation across the business have reduced its ethnicity pay gap by 7%, and the proportion of ethnic minority employees who receive bonus pay has increased by 21% in line with the fund’s increase in recruiting a more diverse workforce.
The PPF has reported that an underrepresentation of ethnic minority employees in senior management roles and in business areas which command higher pay and bonuses, such as investment, risk and IT, are the driving factors for its current ethnicity pay gap.
To address this, the fund has set ambitious targets which will increase ethnic minority representation across the organisation to 30% and within senior management roles to 25% by December 2023.
Easter added: “While we’re confident we’re doing all we can to increase ethnic minority representation across the business, our high retention rate, while positive, means we don’t have vacancies at every level that can create real change.”
To address this, she said, the PPF will continue to “invest in our people, and provide specialist training and flexible working so all groups, regardless of background, are fully represented at all levels across the PPF”.
The fund is also working to change industry perceptions through the Diversity Project which is an initiative that champions a more inclusive culture in the savings and investment profession, she said.
The PPF has reported in its Diversity Pay Gap Report 2021 that it now has equal female representation and increased ethnic minority representation on its board and executive committee.