UK roundup: UK target date funds, Energizer, De La Rue, Teeside
UK - HSBC has reported
its series of target-date retirement funds have locked in gains of more than 30% in their first year, while the Energizer Trust has appointed a provider for a range of pension services to its pension scheme.
Elsewhere De La Rue, a commercial printer and papermaker, has confirmed it will close its defined benefit (DB) scheme to future accrual after its actuarial deficit exceeded £200m (€236m) in 2009, while Middlesbrough Borough council is seeking a legal adviser for the Teeside pension fund.Figures from HSBC showed its series of five Protected Retirement Funds, launched in May 2009, have reported a percentage growth of between 22.1-32.03% over the first year, excluding charges.
HSBC claimed the series of target date funds, which aim to deliver growth from global equity markets "with 100% capital protection", are the only protected funds available to UK group pension schemes. This is despite target date funds seeming to be the favoured approach for the default fund of the forthcoming National Employment Savings Trust (NEST). (See earlier IPE article: Persistence more important than risk in NEST early years)
The five HSBC protected retirement funds offer maturity dates for every five years between 2020 and 2040, with gains locked in on a daily basis and investors receiving a value at maturity that is based on the highest unit price achieved while the fund is exposed to equity markets.
It is expected pension members would normally invest in the fund that matures before their retirement date, and figures for the 2020 fund showing a 22.13% percentage growth rate in the first year between the current unit price and the protected price. Meanwhile the 2025 fund reported a growth rate of 30.98%, while the three remaining funds all had figures of 32.03%.
Rob Pearce, head of workplace retirement services at HSBC, said these funds "fill an important gap in the group pension market. We are providing members with exposure to potential growth in global stock markets, while protecting the value of their contributions against any fall in value, as long as they remain invested until the maturity date".
Buck Consultants will now take on the provision of actuarial, administration, consulting and investment consulting services for the £33m (€38.6m) defined benefit (DB) Energizer UK Pension Plan, which has approximately 1,000 members.Meanwhile De La Rue, which prints the national currencies of 150 countries including supplying the Bank of England, has reported the actuarial deficit in its DB scheme almost quadrupled from £56m in 2006 to £204m in April 2009.
This is despite special contributions of £51m over the three-year period, as it blamed the increased shortfall on a drop in asset values and increasing life expectancy. De La Rue has now agreed a new funding plan with trustees comprising annual payments of £15m a year for approximately 11 years with a 4% annual increment.
However to help limit the deficit a new defined contribution (DC) scheme will be opened for all employees over the summer and from 1 April 2013 the final salary and retirement plan will close to future accrual, which is expected to reduce the deficit by a further £20m.
The five-year contract will require the adviser to provide legal services relating to the £90m direct commercial property portfolio of the pension fund, such as acting for the scheme when properties are bought or sold and in all matters relating to the tenants.
At the end of January 2010 the pension fund had an allocation of 15% to bonds and cash, 40% in UK equity, 25% in overseas equity, 5% in property and the remainder in alternatives. The closing date for submissions is 25 June 2010 and further information can be obtained from Middlesbrough Council.