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UK roundup: PIC, ITB, Aon Hewitt, Pitmans Trustees

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  • UK roundup: PIC, ITB, Aon Hewitt, Pitmans Trustees

UK - Trustees of one of ITB's pension funds have completed a £150m buy-in with Pension Insurance Corporation, marking the third such de-risking deal seen this month.

ITB, which operates both an open and a closed fund, completed the deal on behalf of the latter scheme and sought to secure the pensions of 1,600 members.

The £153m buy-in was launched by trustees following a review of the closed fund's investment strategy, with both LCP and Mayer Brown advising trustees.

Peter Rogerson, chairman of the scheme's trustees, said he was "delighted" to have completed the deal.

"In proceeding with the buy-in, the trustees have taken similar action to the trustees of many other major UK pension schemes that had completed buy-ins over the last few years," he said.

The deal follows the buyout of all Nova Chemicals' pension liabilities, again by PIC, as well as the significantly larger longevity swap deal agreed between UK broadcaster ITV and Credit Suisse, valued at £1.7bn.

In other news, Aon Hewitt has said that while the value of individual defined contribution (DC) savings has fallen over the last three months, positive returns on fixed income gave it "confidence" about the long-term prospects for the savings vehicles.

The consultancy calculated that, for 30 year olds in the UK, expected retirement income had fallen by around 4% a year, while those near retirement age had seen 2% falls in annual income.

John Foster, benefits consultant at Aon Hewitt, noted that the price of annuities had risen to its highest rate since the consultancy began collecting data for its DC index.

"Combining this with high market volatility and [the impact] an uncertain economic climate has had on the value of pension pots for DC scheme members in the UK - they have significantly dropped in equity value," he said.

"Despite this gloomy picture, we have seen positive returns on bonds and gilts, which gives us confidence in the long-term outcome for pension pots."

Finally, a survey by Pitmans Trustees has found that more than half of potential scheme trustees are deterred from doing so by the lack of training, while a similar amount also raised concerns about the financial liability such a role entailed.

Richard Butcher, managing director at Pitmans, argued that the findings, which also found that the ability to request time off for training was not deemed sufficient, were not all that surprising.
 
"Superficially, this may reassure us that our assumptions were correct, but it may also imply that we have not done enough, as an industry, to solve the problems," he said.

He argued that the industry should re-examine the approach to training to guarantee trustees were granted the tools required to do an effective job.

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