Church Workers Pension Fund has completed a £160m (€193m) bulk purchase annuity buy-in transaction with Aviva Life & Pensions UK Ltd.
Aviva will insure the defined benefit pensioner liabilities for 2,400 members, removing the investment and longevity risk of these members from the scheme, it was announced.
Members will see no change in the amount of their benefits or the way in which they are paid as a result of the transaction, it added.
The scheme trustee was independently advised throughout the process by LCP.
In selecting an insurer, the trustee placed a strong emphasis on ESG considerations and robust investment processes, according to a statement.
“Aviva demonstrated thorough integration of sustainability criteria when deciding where to invest capital,” it said.
Another key theme was active engagement – something both parties see as a key element of stewardship.
Clive Mather, chair of the Church of England Pensions Board, said: “The ‘buy-in’ is good news for employers, members and the pensions board in reducing risk for all of us, and helping to secure the pensions of those who have given so much to the Church.
“This transaction is made possible by excellent returns on investments in recent years, and the continued support of the employers. I am delighted we have secured this agreement with Aviva, a long-standing pension provider and responsible investor.”
Jamie Cole, head of bulk purchase annuity origination at Aviva, said: “This has been a very smooth process run by a well prepared and well-advised scheme. The trustees put ESG and responsible investing at the heart of their decision making and so we are proud to be working with the Church of England Pensions Board, given that this is a key pillar of Aviva’s purpose.”
National Grid scheme hires Barnett Waddingham
The trustees of the National Grid Electricity Group of the Electricity Supply Pension Scheme (NGE Group), with net assets of more than £3bn (€3.6bn) and close to 8,500 members, has appointed Barnett Waddingham (BW).
The firm will provide a variety of services to support the trustees which have started being phased in, it was announced.
BW said the appointment includes specialist services supporting actuarial, investment and integrated risk management (IRM) strategy and from the beginning of March, the current in-house trustee executive and member engagement services will move to BW.
The NGE Group will have access to dedicated BW experts across all relevant areas, including communications and risk management through a multi-disciplinary delivery model designed to meet its specific needs both now and as they evolve over time, BW added.
Employees supporting the NGE Group will primarily be based in the company’s Longbridge office.
“The principles and ethos we share with NGE Group gives us the ability to deeply engage and build tailored services creatively designed to improve member outcomes. Together we will help manage the scheme efficiently and effectively as it plans its future direction for the benefit of every member,” said Paul Jayson, partner at BW.
Jon Carlton, chair of the NEG Group, said: “The team at BW has impressed us throughout the tendering process. Their collaborative approach to working with the Group trustee and mix of team members with the right experience and attitude to their work will be truly beneficial to the scheme and our members.”
He said the Group trustee, which was supported by Cosan Consulting, took a comprehensive look at the services the Group required and the BW team “took the time to totally understand what we wanted and worked with us to create a bespoke service with the scheme’s specific characteristics at its heart”.
Hymans calls on plan sponsors to take control over DB valuations
Plan sponsors should take more control of their defined benefit (DB) pension schemes’ valuation process as they approach forthcoming triennial valuations, warned Hymans Robertson.
According to recent research conducted by the consultancy, nearly two thirds (61%) of pension scheme professionals reported that the trustees, rather than companies, took the lead at their last pension funds’ valuations.
Hymans has cautioned, however, that the tougher regulatory regime and enhanced regulatory powers that are now in place mean companies should take control to get the best outcome and to manage increased regulatory risk.
Alistair Russell-Smith, head of corporate DB at Hymans, said: “Companies should plan the forthcoming valuation like they would a corporate transaction. By considering the options upfront and taking a proposal to the trustees, rather than waiting for the trustees to act, they can achieve better corporate outcomes and manage increased regulatory risk.”
He noted, however, that there were many factors to include as they developed a proposal. “Key actuarial assumptions to consider include RPI, the CPI wedge and longevity. There is a case for introducing an inflation risk premium to reduce the inflation assumption, particularly when inflation risk is not hedged,” he added.
Arguably there is also now sufficient evidence to make some allowance for COVID-19 in longevity assumptions, Russell-Smith said.
Longevity specialist Club Vita has developed four longevity scenarios – three of these lead to a reduction in liabilities. The modest ‘bump in the road’ scenario reduces liabilities by 0.9%.
Russell-Smith said it was also worth considering funding expenses out of scheme assets if schemes were in a technical provisions surplus.
“As DB schemes hurtle towards their end game, this valuation cycle is also the ideal opportunity for corporates to review their endgame goals, understand the timescales to buy-out, and actively plan the scheme’s route,” he added.
“Improved funding levels and the maturing of the liabilities mean that buy-out might be sooner than the corporate expects,” he said.
UK pension fund sells office building
The Harmsworth Pension Fund has sold St Paul’s House, a newly refurbished city-centre office building in Winchester, to Aegon UK Property Fund for £15.9m (€19m), reflecting a yield of 4.74%.
The 36,000 sq ft asset, which is fully let to actuarial firm Lane Clark & Peacock on a 15-year lease, comprises four office floors along with ancillary space on the lower ground floor.