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UK roundup: ONS, Lincolnshire, Visteon trustees

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  • UK roundup: ONS, Lincolnshire, Visteon trustees

UK - Membership of UK employer sponsored pension schemes dropped to 50% of the total workforce in 2009, according to latest figures from the Office of National Statistics (ONS).

Meanwhile, Lincolnshire County Council has awarded JP Morgan a transition management mandate, and the trustees of the Visteon pension scheme have dropped their claim in the company's insolvency proceedings in the US to recover funds from Visteon Corporation to improve the funding position of the scheme.

Figures from the ONS Pension Trends series of data revealed a drop in the proportion of employees with occupational pensions between 1997 and 2009, from 46% to 33% for defined benefit (DB) schemes and from 9% to 6% for defined contribution (DC) pension funds.

However the analysis in Chapter 7: Pension Scheme Membership noted this decline was partially offset by an increase in the number of employees with employer sponsored personal pensions, such as stakeholder schemes. These were introduced in 2001 and were held by 4% of employees in 2009, while group personal pensions (GPPs) also saw an increase in membership over the 12-year period from 1% to 6% of employees.

Additional findings, based on the Annual Survey of Hours and Earnings (ASHE), revealed 66% of UK employees in an employer-sponsored pension scheme were contracted out of the State Second Pension, an action that will be abolished for members of DC schemes from 6 April 2012.

Lincolnshire County Council has completed a restructuring of the equity portfolio of its £1.2bn (€1.4bn) pension fund with the help of JP Morgan Worldwide Securities Services.

The transition management mandate covered "all phases of the transition from strategy development through to execution and performance review", as Lincolnshire restructured and implemented its equity investment portfolio.

Jo Ray, financial adviser for pensions and investments at Lincolnshire County Council Pension Fund, said; "We were keen to minimise cost in implementing this change and required total transparency throughout the process. We have received a consistently high level of service from JP Morgan and are pleased with the outcome, which was delivered within cost expectations."

Earlier this month Lincolnshire confirmed it had appointed three global equity managers - Threadneedle, Neptune and Schroders - to run a 20% allocation to the asset class, while the pension fund is also in the process of seeking an alternatives manager to run a portfolio of between 10-15% of the scheme's total assets (see earlier IPE articles: UK roundup: Lincolnshire, Essex and UK roundup: BA, Lincolnshire, West Sussex, the AA).

Meanwhile the trustees of the Visteon pension fund and the Pension Protection Fund (PPF) have withdrawn their claims to recover funds from Visteon Corporation through its insolvency proceedings after The Pension Regulator (TPR) indicated it would not be appropriate to exercise its 'moral hazard' powers against the company.

The trustees, alongside the PPF, had filed a claim under US bankruptcy proceedings to try to reclaim funds for the scheme, while at the same time TPR conducted an investigation into the position of the pension scheme and whether it should use its moral hazard powers against Visteon.

But in an update to members, the trustees said Visteon and its subsidiaries had filed an objection that challenged both the trustees' claim and the ability of TPR to exercise its regulatory powers in this particular case. The trustees were given a limited amount of time to respond to the objection, and based on legal advice and their current knowledge of the situation, decided to withdraw their claim - as has the PPF.

The letter to members highlighted that the claim depended on TPR being able to use its regulatory powers to recover any funds from Visteon. The trustees said TPR had decided it did not consider it appropriate to commence regulatory action against Visteon and the other US companies included in the Chapter 11 proceedings.

The trustees subsequently concluded that "the costs and risks of pursuing litigation outweigh the likely benefits, and therefore such action is no longer likely to be in members' best interests". The trustees added that they would "continue to assist TPR in its further investigations against other entities or persons in relation the plan".

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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