The trustees of the EDS 1994 Pension Scheme have signed a £1.1bn (€1.3bn) pension insurance buy-in with Pension Insurance Corporation (PIC), a specialist insurer of defined benefit (DB) pension schemes.
The agreement provides certainty and security for all of the scheme’s 3,000 pensioners and 2,300 deferred pensioners. The full scheme buy-in has been secured in anticipation of a full buyout of the scheme, it was announced.
The trustee advisers, Mercer and Sackers, structured and led the transaction, which included cover for residual risks and was supported by up front insurer due diligence reports, known as Buyers’ Reports, prepared by DLA Piper and ITM.
The company was advised by Mercer and Eversheds. PIC was advised by Addleshaw Goddard.
Ian Wilson, chair of trustee of the EDS scheme, said: “The trustee is pleased to have reached such a great outcome for our members, which was achieved through a collaborative partnership with the company and with the extensive support of our and the company’s advisers. We are pleased to partner with PIC on this transaction and are confident that their proven member experience and strong financial credentials will ensure members’ benefits are secure.”
Tristan Walker-Buckton, head of pricing at PIC, said: “It was immensely helpful to understand the clear goals of both the trustee and sponsoring employer. PIC’s responsiveness to these requirements, supported by the Buyers’ Reports, enabled the transaction to be completed within a short timeframe.”
PPF achieves strategic priorities
The fund said that since these priorities have now been achieved, the PPF is in a position of strength for the future so it can continue to support its 438,998 PPF and Financial Assistance Scheme (FAS) members.
Oliver Morley, PPF chief executive officer, said: “This year, we’ve paid out £1.1bn in member payments, more than last year. This underpins once again the importance of our role in providing assurance, not only to our existing members, but also the promise of protection we offer to the 9.7 million members in the DB [defined benefit] schemes we protect.”
He said that, going forward, the PPF’s priority remains to “provide protection and reassurance, while also continuing to innovate and respond to the changing economic and social climate that impacts our levy payers and members”.
The PPF also reported its exceptional investment performance over the past financial year had played a key role in strengthening its financial position, increasing its funding ratio to 137.9% and its reserves to £11.7 bn.
A key highlight was the fund’s continued focus on sustainable investment which allowed it to grow its global forestry portfolio by 20% to hit £1bn in the past year.
Against the backdrop of its strengthening financial position, the PPF will now complete its review of its long-term funding strategy. The review, which will be published in the coming months, has been considering afresh the risks the fund faces and how its approach to funding will need to evolve.
As the review enters its final stages, an emerging conclusion is that the PPF will need to redefine its funding objective to focus on maintaining financial resilience. The fund is now considering the role levy will play in maintaining financial resilience and will consider changes as part of the consultation on the 23/24 levy in September.
The PPF will publish the outcome of the PPF’s Long-Term Funding Strategy Review this autumn, as well as announce how much it intends to charge in levy next year and consult on the levy rules for 2023-34.