The Maersk Retirement Benefit Scheme has agreed a £1.1bn (€1.2bn) bulk annuity transaction with Legal & General Assurance Society Limited, which will secure the benefits of around 1,900 deferred members and 3,000 retirees.
The scheme’s trustee has, over the past few years, taken several steps to de-risk the scheme including fully hedging its interest rate and inflation exposures, it was announced.
This approach put the Maersk scheme in a strong position to weather the recent market volatility and take advantage of an opportunity to further de-risk by entering into a buy-in transaction with Legal & General.
Nigel Pusey, chair of the scheme’s trustee, said: “After many years of careful management and de-risking we have now secured our members’ benefits through a buy-in with Legal & General.”
He added that the trustee was “impressed with the flexibility and professionalism shown by Legal & General” to complete the transaction at a challenging time.
Laura Mason, CEO of Legal & General Retirement Institutional, said: “As one of the larger pension risk transfer transactions of 2020, today’s announcement demonstrates the resilience of the market and the ability of insurers, such as ourselves, to transact amidst a challenging economic environment.
“It also allows us to continue providing wider benefits for the UK economy as we invest responsibly in crucial areas, such as affordable housing, renewable energy and transport – benefitting our cities, future generations and society as a whole.”
Aon: 2020 events likely to lead to more UK DB scheme closures
A recent survey conducted by consultancy Aon has shown that the market events of 2020, combined with the trends of recent years, could lead to a fresh wave of benefit reviews by UK companies – and of pension scheme closures – in the coming year.
The annual Pension Benefits Design Survey of over 300 clients in the private sector disclosed that an increasing number of companies are reviewing their UK defined benefit (DB) schemes.
Data collected up to the end of Q1 2020 showed that 68% of schemes were now closed to future accrual – 8% more than in last year’s survey.
Dave Hughes, head of Aon’s benefit design team, said: “It’s no surprise that the trend towards DB closure has continued, but, with our survey showing the trend up to March 2020, the key question now is how the market will respond to the COVID-19 pandemic.”
He said the survey shows a clear link between previous financial turmoil and benefit review activity, so he expects to see an increase in benefit reviews next year.
“We are already working with a number of clients to explore what is right for them and their DB schemes. With a difficult economic outlook ahead, it is difficult to imagine that next year will not see finance directors taking a close look at what will often be the eye watering cost of DB benefits.” Hughes added.
He said that it was important to guide members through the process when closing a DB scheme to accrual. “They need to understand why a change is being proposed, what it may mean for them and what they can do to get the best outcome in the future.”
To support this, personal illustrations, townhall meetings, FAQ documents and one-to-one meetings are becoming common, he said, however, adding that providing communications support in the current climate brings its own challenges.
“For those normally based in office environments, we expect to see clients adapt to communicating these difficult messages via video conferencing. But, for example, in manufacturing environments, the approach of holding townhall meetings may no longer work and alternative methods may need to be considered.”
PLSA survey shows greater diversity and inclusion can improve decision-making
Greater diversity and inclusion within the pensions industry can improve decision-making and help with attracting and retaining talent, a survey conducted by Pensions and Lifetime Savings Association (PLSA) has revealed.
The pension scheme research showed that 91% of those surveyed agreed greater diversity and inclusion would improve decision-making and attract and retain talent, while 89% agreed that diversity could improve the representation of members’ interests.
However, there were mixed views as to the diversity of pension trustee boards, with just over a quarter saying it was good (28%), a third saying it was poor (31%), and another third saying it was average (35%).
The PLSA survey findings revealed that to date, almost half (48%) of participants said they had no specific strategic objectives around diversity and/or inclusion, of which few had a plan in place (12%).
Among those with no plan in place, the vast majority did not know when they would put a plan in place. A quarter had strategic objectives in place, with recruitment and training being the main focus, it said.
Julian Mund, the PLSA’s chief executive officer, said: “Our survey shows that the pensions industry recognises that it needs to do much more to improve diversity and inclusion and are positive about the benefits for schemes and members of doing so – but there’s a long way still to go.”
He said it was “vital” that pension funds had the ”right people in place” with a wide range of skills, backgrounds and outlooks “to ensure all members interests are at the heart of decision-making processes”.
To read more about Diversity and Inclusion, download the PLSA’s Diversity & Inclusion Made Simple report from March 2020 here
To read the digital edition of IPE’s latest magazine click here.
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