Pension Insurance Corporation insures the Alliance Unichem UK Group Pension Scheme
31st August 2010
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Pension Corporation bolsters client service team
21st July 2010
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Pension Insurance Corporation Insures Alitalia Italian Airlines Pension and Assurance Scheme
15th July 2010
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Pension Insurance Corporation – Market Volatility Driving Search For Pension Security
5th July 2010
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Statement regarding John Fitzpatrick and Philip Moore
7th June 2010
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Brand New Website Pensionomics.com Launches to Fuel National Debate on Pensions
1st June 2010
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73% of Trustees Planning to De-Risk – Biggest Barrier is Cost
24th May 2010
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Pension Fund Trustees: “We Should Be Paid”
26th April 2010
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Pension Deficits Narrowed by £30 Billion Due to Increased Real Gilt Yields
15th March 2010
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Pension Corporation Pension Risk Transfer Index
15th March 2010
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Aggregate Industries transfers £300M of pensions risk
9th March 2010
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Pension Corporation Announces 2009 Preliminary Results
4th February 2010
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Pension Insurance Corporation insures the FTSE 100 Liberty International defined benefit pension scheme
4th February 2010
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New association launched to promote trading of longevity risk as an asset class
1st February 2010
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Pension Insurance Corporation to insure the Inchcape Shipping Services Pension Scheme; More than 100,000 pension scheme members now under Pension Corporation
25th January 2010
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Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that Pension Insurance Corporation has insured the Inchcape Shipping Services Pension Scheme (“ISS”). ISS is the world’s leading marine services provider.
Pension Insurance Corporation was selected by the trustees on the flexibility of its offering and ability to transact promptly. The pension insurance buyout is for £15 million of liabilities and relates to the entire scheme.
In a little over a year, Pension Insurance Corporation has completed the UK’s largest ever pension insurance buyout (the Thorn £1.1billion pension insurance buyout), the first ever public sector backed transaction with the former DEFRA sponsored body, Food From Britain, and a £500m pension insurance buy-in with the Cadbury Pension Fund, amongst other transactions.
Pension Corporation has achieved a leading market share by offering innovative, tailored solutions which match client requirements. It oversees pension fund liabilities of c.£6 billion and is affiliated to more than 100,000 pension scheme members or former members.
John Horrocks, Chairman of the ISS Trustees, said:
“We are very pleased to have completed this pension insurance buyout with PIC. The ongoing security of our members’ pensions is of the utmost importance to us as Trustees and we believe that PIC will provide that security for the longterm.”
Matt Barnes at Pension Insurance Corporation, commented:
“We are delighted to have been able to help the Trustees of the Inchcape Shipping Services Pension Scheme achieve their goals of securing members’ benefits. In what has been a difficult 12 months for many sponsors and pension schemes alike, we have tailored a number of innovative solutions which match the needs of trustees and scheme members and we look forward to providing further groundbreaking solutions to meet client needs during 2010.”
For further information:
Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140
Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200
Nick Henderson
+44 (0)20 7269 7114
About Pension Corporation
Pension Corporation assists the trustees and sponsors of defined benefit pension funds in removing risk from pension liabilities. As a market leader it provides risk solutions ranging from full pension insurance buyout to longevity risk insurance and asset-liability management. It offers increased levels of security and stability for members benefits through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com
About Inchcape Shipping Services
Inchcape Shipping Services is the world’s leading marine services provider. Through its proprietary network of some 245 offices employing over 3,800 people across 63 countries, ISS provides its customers with an unparalleled global resource delivered locally and tailored to each customer’s individual needs. Its diversified customer base includes clients across the oil, cruise, container and bulk commodity sectors as well as serving naval, government and inter-governmental clients. Additionally, ISS provides landside commercial and humanitarian logistics, transit, offshore support and other associated marine services. The Company now also provides a growing range of outsourcing services. These include global crew and marine spares logistics; port agency management and commercial representation; and sophisticated Enterprise Resource Planning solutions through its subsidiary ShipNet.
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The Impact of the Credit Crunch on Pensions – Pension Corporation study
24th December 2009
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The lack of adequate preparation for the baby boomers and the highest ever level of youth unemployment risk perpetuating the current pensions crisis for at least the next two generations, according to a new paper published by Pension Corporation, which concludes that while the economic crisis and ensuing recession may now be coming to an end, the crisis in pensions continues unabated.
Looking at the impact of the credit crunch and its aftermath on pension provision in the UK, the Study, authored by Dr. Amarendra Swarup and Dr. Frank Eich, is an update of an earlier Study from June 2009. Conducted at the height of the recession, this Study concluded that the crisis had impacted on all aspects of the British pension system and would leave a lasting legacy.
“Back to the drawing board: The economic crisis and its implications for pension provision in the United Kingdom – an update” assesses where the UK pensions system stands at the end of 2009:
- The asset price recovery and the improving economic outlook is not mirrored by a recovery in the prospects for the UK pension system
- Defined-benefit pension schemes continue to struggle, with only anaemic improvements in their aggregate funding position despite the strong rally in assets over 2009, and are closing down at an increasingly rapid rate
- The rise in the value of assets in defined-contribution schemes, whilst welcome, illustrates the volatility and the burden of the future risk placed on the individual
- Alongside the consequences of the current crisis, society also has to prepare for the economic and fiscal consequences of population ageing, married to the retirement of the baby boomers
- With youth unemployment rising to its highest ever, there is the risk that an entire cohort could start their working lives with a broken employment record, making it difficult for them to build up adequate pension entitlements or other forms of long-term savings
- With little evidence of individuals planning for retirement, the likelihood remains that a large percentage of future pensioners will be disappointed by their retirement income
- Meanwhile, the public finance outlook remains bleak and the future fiscal tightening required will depress disposable income growth for years to come and leave the government in a weak position to deal with the above challenges
Pension Corporation is committed to helping facilitate a debate around pensions, through its own published studies and research, sponsorship of other reports, the Pensions Tomorrow initiative at the London School of Economics and other projects.
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Cadbury Pension Fund insures £500m liabilities
16th December 2009
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The Trustees of the Cadbury Pension Fund have agreed a pension insurance buy-in agreement, to insure a part of their pensioner liabilities with Pension Insurance Corporation (“PIC”). The liabilities being insured are valued at approximately £500m. The insurance policy will be held as an asset of the Cadbury Pension Fund, matching a proportion of the Fund’s liabilities. This investment is part of the Fund's ongoing programme of reducing risk in the pension fund.
John Coomber, Chief Executive of Pension Insurance Corporation, commented:
“We have been working with the Trustees for over a year in order to meet their requirements with the most appropriate transaction for the Fund. We are very pleased to have been able to help the Trustees achieve this important step in securing pensioner benefits.”
Aon Consulting acted for the Fund in the placement of this insurance.
For further information please contact:
David Skapinker
T: 020 7505 7478
M: 0750 553 6436
david.skapinker@aon.co.uk
Notes to Editors
Pension insurance buy-in
A pension insurance buy-in is an investment by the trustee of a pension plan in a bulk annuity policy provided by an insurer. The bulk annuity relates to specified pensioner members of the plan, and will pay the plan the agreed level of benefits for the lifetime of these members (and potentially that of their dependants). This means that the asset generally matches the plan’s obligation to these members, so removes investment, inflation and longevity risks from the plan in relation to the specified members. Because the policy is held in the name of the plan, however, the trustee retains responsibility for the payments made to members, and typically needs to ensure that there is no preferential treatment as a result of the buy-in in relation to those members specified under the policy.
About Aon Consulting
Aon Consulting Worldwide is among the top global human capital consulting firms, with 2008 revenues of $1.358 billion and more than 6,300 professionals in 117 offices worldwide. Aon Consulting works with organisations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007 and 2008. For more information on Aon, please visit www.aon.mediaroom.com.
About Aon
Aon Corporation (NYSE: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 and 2009 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007, 2008, and 2009, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007, 2008 and 2009 by the readers of Business Insurance. For more information on Aon, log on to http://www.aon.com.
Sign up to receive Aon news alerts by email or RSS feed at:
http://aon.mediaroom.com/index.php?s=58.
Safe Harbour Statement: http://aon.mediaroom.com/index.php?s=67
Aon Consulting Limited is authorised and regulated by the Financial Services Authority.
About Pension Corporation
Pension Corporation removes pension risks from the trustees and sponsors of defined benefit pension funds. As a market leader it provides risk solutions ranging from full pension insurance buyout to longevity risk insurance, sponsor stewardship and asset-liability management. The Group provides increased levels of security and stability for members benefits through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com.
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Pension Risk Transfer Market to have busiest quarter since Q3 2008
19th October 2009
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Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, expects that the final three months of 2009 will be the busiest for pension insurance buyout and buy-ins since Q3 2008, when there was approximately £2 billion of risk transferred.
Pension Corporation’s latest Pension Risk Transfer Index, published today, shows that overall affordability for pension insurance is at its most favourable level since September 2008. Sponsors and trustees are anxious to de-risk their pension funds post the Lehman bankruptcy; and in addition, as credit spreads continue to come in, those schemes invested in gilts and corporate bonds have an impetus to transact as the cost of delay becomes relatively more expensive for them.
High levels of uncertainty around the markets and the economy are leading Trustees to seek to increase the speed of a risk transfer transaction. This trend is being driven by concerns that scheme assets will again reduce in value if there is a second wave of asset price falls; also around future economic policy, including the phasing of quantitative easing and consequential levels of inflation; and the weakening of the corporate covenant should insolvency rates increase.
As well as quicker transaction processes, Trustees are increasingly seeking innovative risk transfer solutions, rather than a straight focus on price, as concerns over market volatility mount. This has manifested itself in Trustees increasingly requesting the immediate transfer of investment risk to the insurer upon signing of exclusivity, rather than on signing of the detailed policy documents.
David Collinson, Partner at Pension Corporation, commented:
“Several key factors in the market are helping to drive sponsors and trustees to offload as much risk as they are able to afford during this quarter. Perhaps the most significant of these is that the overall affordability for schemes is at its most favorable since September 2008, just before Lehman collapsed.
“However, it should be noted that Trustees, whilst keenly interested in price, are now considering other factors when they wish to transact. One of the key innovations which we are increasingly being asked to provide is the immediate transfer of investment risk during the period of exclusivity before contracts are signed.”
Notes to Editors:
For further information please contact:
Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140
Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200
Nick Henderson
+44 (0)20 7269 7114
Caroline Parker
+44 (0)20 7269 7295
About Pension Corporation
Pension Corporation removes pension risks from the trustees and sponsors of defined benefit pension funds. As a market leader it provides risk solutions ranging from full pension insurance buyout to longevity risk insurance, sponsor stewardship and asset-liability management. The Group provides increased levels of security and stability for members benefits through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com
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Pension Corporation Pension Risk Transfer Index
19th October 2009
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Pension Corporation’s latest Pension Risk Transfer Index, published today, shows that overall affordability for pension insurance is at its most favourable level since September 2008. Sponsors and trustees are anxious to de-risk their pension funds post the Lehman bankruptcy; and in addition, as credit spreads continue to come in, those schemes invested in gilts and corporate bonds have an impetus to transact as the cost of delay becomes relatively more expensive for them.
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Pension Insurance Corporation to insure three Denso pension schemes
17th September 2009
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Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that the Trustee of three Denso Manufacturing Midlands Ltd pension schemes has agreed a pension insurance buyout with Pension Insurance Corporation (“PIC”). The Trustee purchased a bulk annuity contract from PIC, which covers pensioners and deferred members with total liabilities valued in excess of £100m.
The pension insurance buyout of the schemes concludes the company’s initiative in bringing increased levels of safety and security to member benefits.
Denso is a leading global supplier of advanced automotive technologies, systems and components.
PIC was chosen by Denso and Capita Pension Trustees Limited, as Trustee, after a comprehensive and competitive process. Denso was advised by KPMG and Baker & McKenzie, with Capita being advised by Mercer and Hammonds.
John Coomber, Chief Executive Officer, Pension Insurance Corporation, said:
“We are delighted to have concluded this transaction with Denso, a company which has a well founded reputation for looking after its employees. The increased levels of security brought to member benefits through this pension insurance buyout reflect this stance. This was an ‘all risks’ transfer allowing the company an immediate and complete discharge from the schemes, in contrast with the usual insurance process which can often take more than a year to conclude. To accelerate this risk transfer, Pension Corporation became the sponsor to the schemes at the same time as the PIC insurance policy was purchased. This presented a number of challenges which we have successfully addressed. We believe that this will be the first of several transactions with large multinational organisations.”
Rosemary Kennell, Director of Capita Pension Trustees Limited, as Trustee to the schemes, said:
“This transaction with Pension Insurance Corporation is another ground breaking all risks transaction that Capita have been involved in as a professional trustee and means that members now have increased levels of security for their benefits. It adds to our experience of other complex and international pensions cases, which we have managed pro-actively and efficiently.”
Wayne Segers, Director at KPMG, as advisor to Denso, said:
“KPMG is delighted to have led on this transaction and to have worked with Pension Insurance Corporation to design and implement the best solution for our client, whilst also securing member benefits for the long term. The Pension Insurance Corporation team was responsive and flexible to the requirements of sponsor and Trustee. This transaction builds on our significant experience in advising Japanese companies on UK pension matters.”
Stuart Faloon, Principal at Mercer, as adviser to the Trustee, said:
“This is the latest in a series of transactions where Mercer has advised trustees on bulk annuity solutions in conjunction with its sister companies, Oliver Wyman and Marsh. Due to the schemes' complex benefit structures and the requirement to facilitate a quick transaction, this deal with Pension Insurance Corporation required experienced personnel with the ability to negotiate robustly whilst maintaining a strong focus on completing the right deal for all parties.”
Notes to Editors:
For further information please contact:
Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140
Financial Dynamics
Rob Bailhache
+44 (0)20 7269 7200
Nick Henderson
+44 (0)20 7269 7114
Caroline Parker
+44 (0)20 7269 7295
About Pension Corporation
Pension Corporation removes pension risks from the trustees and sponsors of defined benefit pension funds. As a market leader it provides risk solutions ranging from full pension insurance buyout to longevity risk insurance, sponsor stewardship and asset-liability management. The Group provides increased levels of security and stability for members benefits through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com
Pension Corporation LLP is a limited liability partnership registered in England under registration number OC316968. Our insurance solutions are provided through Pension Insurance Corporation Ltd, registered in England under registration number 05706720, which is authorised and regulated by the Financial Services Authority (FSA FRN 454345). Both Registered offices are at 14 Cornhill, London EC3V 3ND.
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Pension Corporation Strengthens Team To Ensure Smooth Processing of New Business Pipeline
10th September 2009
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Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that it has made a number of appointments across the business to bolster its team.
Laura Upton and Tim Edwards have been appointed senior transition managers within the operations team; Marco Diolosa and John Sladden have joined the Asset-Liability Management team; Richard Purcell joins Pension Corporation as actuary within the finance team; and Ben Tregoning joins as business development executive working across Pension Corporation Investments and Pension Insurance Corporation to analyse specific transactions.
Ben Tregoning, John Sladden, Laura Upton and Tim Edwards join Pension Corporation from Paternoster. Richard Purcell joins from Watson Wyatt and Marco Diolosa from Russell Investments.
Kim Gozzett, Partnership Director, Pension Corporation, said:
"I am delighted that we have been able to appoint so many outstanding candidates. Pension Corporation has an increasingly busy pipeline of transactions and it is important that we have the people to ensure that they run smoothly. These appointments, combined with our existing team, will ensure we maintain a first class level of service for trustees and corporate sponsors."
Enquiries:
Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140
Financial Dynamics
Nick Henderson
+44 (0)20 7269 7114
Caroline Parker
+44 (0)20 7269 7295
About Pension Corporation
Pension Corporation removes pension risks from the trustees and sponsors of defined benefit pension funds. As a market leader it is the counterparty to risks ranging from full pension insurance buyout to longevity risk insurance, sponsor stewardship and asset-liability management. Established in 2006 by the Truell Charitable Foundation, the Group now provides increased levels of security and stability for fund members through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com
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Pension Insurance Corporation insures the final tranche of the Thomson Regional Newspapers Pension Fund
4th September 2009
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Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that Pension Insurance Corporation (“PIC”) is to insure the remainder of the Thomson Regional Newspapers (“TRN”) Pension Fund, a pension scheme sponsored by Citigroup (“Citi”).
The TRN Trustee directors purchased a bulk annuity contract from PIC, the FSA authorised and regulated insurance arm of Pension Corporation. The policy covers primarily the deferred members of the scheme with liabilities valued at approximately £35m.
The insurance policy will be held as an asset by the TRN Pension Fund. The Trustee Directors will continue to be responsible for paying benefits to the Fund's members.
Steve Balmont of Law Debenture, Chairman of the TRN Trustee body said: "We are pleased to have worked together with Pension Insurance Corporation, Citi and our advisors to purchase a further insurance policy that puts the Fund members' benefits on an even more secure footing."
Jay Shah, co-head of origination, Pension Corporation, said:
"We worked closely with the Trustee directors, their advisers and Citi to achieve their immediate objectives of providing a tailored insurance solution. This deal follows on from several other innovative insurance solutions provided by Pension Corporation to pension schemes in recent months."
Francis Fernandes, Citi, said:
"We are delighted to have helped structure this deal. Under Citi's sponsorship and also now the PIC insurance solution, the TRN Fund enjoys a level of security to which most other UK pension schemes can only aspire. We believe TRN is a great example of how pension scheme risk-management should operate in practice."
Enquiries:
For further information:
Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140
Financial Dynamics
Nick Henderson
+44 (0)20 7269 7114
Caroline Parker
+44 (0)20 7269 7295
About Pension Corporation
Pension Corporation removes pension risks from the trustees and sponsors of defined benefit pension funds. As a market leader it is the counterparty to risks ranging from full pension insurance buyout to longevity risk insurance, sponsor stewardship and asset-liability management. Established in 2006 by the Truell Charitable Foundation, the Group now provides increased levels of security and stability for fund members through Pension Insurance Corporation Ltd (“PIC”), an FSA authorised and regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). For further information please visit www.pensioncorporation.com
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Pension Insurance Corporation insures the Walthamstow Stadium Limited Retirement Benefits Scheme
24th August 2009
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Pension Corporation, a leading provider of risk management solutions to defined benefit pension funds, today announces that the Trustee of Walthamstow Stadium Limited Retirement Benefits Scheme has accepted a proposal to insure its benefits with Pension Insurance Corporation (“PIC”). The pension scheme has assets of £19 million.
Following the closure of the business, based around the former greyhound racecourse in East London, the pension scheme was closed to future accrual. The Trustee ran a competitive process which included several other pension insurance companies.
The Trustee concluded that the safety and security of member benefits would be secured through a full pension insurance buyout transacted with Pension Insurance Corporation. The Trustee was impressed with Pension Corporation’s business approach and willingness to do business on competitive terms.
Matt Barnes, Partner, Pension Corporation, commented:
“I am delighted that we were able to help the Trustee of the Walthamstow Stadium scheme arrive at a successful conclusion in securing their member benefits for the long term. We look forward to helping more trustees and sponsors transfer pension risk as the market continues to grow during the second half of 2009.”
Notes to Editors:
For further information:
Pension Corporation
Jeremy Apfel
+44 (0)20 7105 2140
Financial Dynamics
Nick Henderson
+44 (0)20 7269 7114
Caroline Parker
+44 (0)20 7269 7295
About Pension Corporation
Pension Corporation removes pension risks from the sponsors and trustees of defined benefit pension schemes. As a market leader it is the counterparty to risks ranging from full buyout to longevity risk insurance, scheme stewardship and asset-liability management. It provides increased levels of security and stability for scheme members through Pension Insurance Corporation Ltd (“PIC”), a fully authorized and FSA-regulated insurance company; and Pension Corporation Investments LP Inc. (“PCI”). Pension Corporation is backed by a range of financial services firms including J.C. Flowers, Royal Bank of Scotland, Swiss Re and JP Morgan. For further information please visit www.pensioncorporation.com
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“Pensions’ very own systemic risk” by Dr Frank Eich, Professional Pensions
21st August 2009
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The term “systemic risk” is normally used to describe
the risk that idiosyncratic shocks affecting individual
businesses could be transmitted throughout the financial market, with the result
that the whole market could become unstable or even collapse. As the world
economy has become ever more integrated, this risk has gradually
increased over time but until recently appeared to be more a
theoretical phenomenon than a real issue. Over the last year
we have all seen how serious this risk is in the real world,
with the collapse of Lehman Brothers nearly bringing the
whole global financial system to its knees and pulling the
world economy into recession.
Taking a slightly more liberal definition of “systemic
risk” there are many other areas in which adverse developments in one part
of the market could affect other parts, with the result that the overall structure
could become unsustainable over time.
One such area is pensions; as it is the British pension
system provides a particularly good example. The system
is based on a highly complex structure, with the different
players – individuals, firms and government – interlinked
in myriad explicit and implicit ways. State pensions (with
a large means-testing element but also an earnings-related
component), occupational pensions (defined benefit but
increasingly defined contribution based) and private pen
sions (to be boosted by personal accounts in 2012) are all
meant to work together to avoid pensioner poverty and
enable pensioners to enjoy a quality of life similar to that
prior to retirement. The issue becomes even more compli
cated once the housing market, which provides an impor
tant mechanism for building up assets to fund consumption
in retirement, is brought into the equation. Government,
quangos such as The Pensions Regulator or the Personal
Accounts Delivery Authority, corporate sponsors and pen
sion fund trustees, independent financial advisers and last
but not least the individual (hopefully entirely rational, for
ward looking and financially literate) all play pivotal roles
to keep the pension system alive.
A failure of one part of the system to deliver what it is
meant to deliver could jeopardise the smooth functioning
of other parts of the system, making the entire structure
eventually unsustainable. The key difference between
the “systemic” risk in the British pension system and the
financial markets is perhaps the time span over which the
problems materialise and become apparent. In the case
of pensions the developments are driven to a large extent
by slow-moving demographic change so the collapse will
resemble more a slow decline than a rapid wildfire. While
the seriousness of the issue is perhaps similar, the slow col
lapse at least gives plenty of time to act. Unfortunately, as
we have seen again and again, it also gives plenty of time
to procrastinate.
Looking back
So, what is wrong with the British pension system? To
answer this question one has to go back at least 10 years.
Up to the late 1990s the British pension system was charac
terised by modest state provision aimed at alleviating pen
sioner poverty and solid occupational pensions for those on
medium or higher incomes, with defined benefit pension
schemes widespread in the public and private sectors. Back
then, around 60% of all pension incomes came from the
state, the remainder from the private sector.
Since the beginning of the new century this tried and
tested model has come under increasing strain, with corpo
rate sponsors of defined benefit pension schemes waking
up to the true costs of the promises made and increasingly
struggling to make the required contributions to meet the
government’s funding requirements for these schemes.
Many corporate sponsors concluded that the only way for
ward was to close their existing DB schemes and shift the risks associated
with pension provision to the individual by
offering defined contribution schemes instead.
Meanwhile, the government focused increasingly on
targeting state pensions on those in greatest need by
introducing first the minimum income guarantee and
later the pension credit to keep state pension spending at
a minimum. In an acknowledgement that not everything
was rosy though, in 2002 the government established the
Pensions Commission to develop ideas on how to help those
on moderate earnings save for retirement while keeping the
public finances sustainable. The Pensions Commission sug
gested three major policy reforms, which the government
more or less implemented as new policy: linking the basic
state pension to earnings growth rather than inflation from
2012 onwards, increasing the state pension age from 65
years in 2010 to 68 years by the mid-2040s as a response
to the projected increase in longevity and the establishment
of personal accounts as a private savings vehicle for those
on moderate incomes also by 2012.
This brief history of recent pension developments in the
UK illustrates that the system was far from stable before
the financial and economic crisis unfolded. The crisis has
set in motion further developments as it has had an adverse
impact on all aspects of the pension landscape.
The first development is the further decline of DB
pensions in the UK – a trend that was not inevitable as
a number of larger scale employers in the private sector
appeared to remain committed to these schemes pre crisis.
In June alone, BP, Morrisons and Barclays all announced
the closure of their schemes either to new members or
to future accruals, with the result that DB pensions have
become exclusive to public sector workers. This means that
most private sector workers have to deal with all the risks
associated with pension provision – longevity, inflation,
investment – on their own. In theory the crisis could also
stress test the viability of the Pension Protection Fund,
which was set up under the provisions of the Pensions
Act 2004 to help members of DB pension schemes whose
corporate sponsors have run into financial difficulties.
Second, those in defined contribution pension schemes
have also done badly, with the stock market offering dis
appointing returns over the last 10 years and more. This
leaves those close to retirement or contemplating buying
an annuity with lower pension wealth than previously
expected and perhaps looking for the government to make
up any shortfall.
Retirement income
With businesses disowning – perhaps rightly in a changing
world in which jobs-for-life no longer exist – their respon
sibility to provide a guaranteed retirement income to their
employees and individuals badly placed to deal with the
risks they increasingly face, the role of government in
ensuring reasonable incomes in retirement might have to be
revisited. But the shock that has impacted on DB and DC
schemes has also affected the government’s ability to help
out. The economic crisis has been a major blow to the public
finances in the UK, with the government now running one
of the largest public deficits anywhere in the developed
world. This leaves the government in a weak position to
meet any potential demands from those on disappointing
DB or DC pensions for higher state spending to fill the gap
and could jeopardise the recent policy reforms before they
have even been launched.
In other words, the continued closure of DB schemes and
weak performance of DC schemes could stretch the govern
ment’s ability to meet its own side of the pensions bargain,
representing its very own kind of “systemic risk”. If this
were indeed to happen then nothing but a complete rebuild
of the UK pension system would suffice to put pensions on a
sound footing in the first half of this century.
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Buyout and risk reduction
19th August 2009
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The buyout and risk reduction marketplace has grown significantly over the last 12 months – with buyout business topping £10bn in 2008 and expected to reach similar levels this year. Yet, the dramatic deterioration in the world economy from September last year has made traditional buyouts less affordable – as pension scheme asset values have fallen and company finances have deteriorated. Despite this, the need for companies and trustees to reduce risk in their scheme has increased markedly. This Conjecture will assess the case for buyout and risk reduction in the current economic environment – looking at how to reduce the immediate cost of buyouts, other routes to risk reduction, how a risk reduction strategy can work in practice and how the risk reduction marketplace will develop over the coming year.
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Bulk Annuities Panel: “Ups and downs”
23rd July 2009
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Pension Corporation named “European Breakthrough Firm of the Year”
13th July 2009
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“Time for a national debate on pension reform” by Edmund Truell, Financial News
6th July 2009
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Pension Insurance Corporation appoints Schroders to manage £100 million
30th June 2009
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“Time to grasp the pensions nettle before it’s too late” by Edmund Truell, The Sunday Telegraph
28th June 2009
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Ponzi public sector pensions schemes – the Second National Debt
11th June 2009
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Pension Insurance Corporation to insure the Warwick International Group Pension Scheme
9th June 2009
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Back to the drawing board: The economic crisis and its implications for pension provision in the United Kingdom by Dr Frank Eich and Dr Amarendra Swarup
1st June 2009
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Pension Corporation launches study on public sector pay and pensions
18th May 2009
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Pension Corporation memorandum included in House of Commons Insolvency Service report
8th May 2009
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Pension Insurance Corporation to insure the Retirement Benefits Scheme of Food from Britain
27th April 2009
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Bulk Annuities Panel: “A tectonic shift”
26th March 2009
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Pension Corporation Announces Results for the Year Ended 31st December 2008
18th March 2009
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“More long-dated gilts needed, please” by John Fitzpatrick, Financial Times
18th January 2009
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Bulk Annuities Panel: “Maintaining Confidence”
15th January 2009
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Pension Insurance Corporation agrees to insure the Leyland DAF Pension Scheme
13th January 2009
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Pension Insurance Corporation agrees to insure the Merchant Retail Group Pension Scheme
19th December 2008
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Pension Insurance Corporation agrees to insure Thorn Pension Fund in largest ever UK buyout
15th December 2008
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Bulk Annuities Panel: “Forwards and Back”
4th December 2008
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“Reaching the crunch decisions” featuring Steven Lowe & Amarendra Swarup, Pensions Week
24th November 2008
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“One Rung at a Time” by Dr Amarendra Swarup, Pensions Week
24th November 2008
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“Pensions Week asks to what extent a finance director should become involved in his or her company pension” featuring John Coomber, Pensions Week
24th November 2008
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Pension Corporation to raise more capital to fund growth, anchored by J.P. Morgan investment; to acquire Synesis Life team
18th November 2008
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“Saving, not spending, is the key to salvation by” by Sir Martin Jacomb, Financial Times
18th November 2008
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Pension Corporation launches Pensions Tomorrow initiative with London School of Economics and Political Science
4th November 2008
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Pension Corporation appoints Frank Eich as Senior Economist
4th November 2008
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Pension Corporation appoints Louise Inward as General Counsel
3rd November 2008
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“Private equity can become a jewel in the crown for pension fund portfolios” by Dr Amarendra Swarup, Pensions Week
20th October 2008
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Pension Corporation strengthens senior management team with appointment of Philip Moore as Group Finance Partner
20th October 2008
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Pension Corporation says £250 billion of new capacity needed by 2012 to fulfill pensions’ buyout demand - £30 billion of additional solvency capital required
29th September 2008
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“Are public sector pension schemes a car crash waiting to happen?” by Dr Amarendra Swarup, Pensions Week
22nd September 2008
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Pension Insurance Corporation agrees to insure greater pension benefits for UK Can Pension Plan members than those provided under the Pension Protection Fund
2nd September 2008
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“Facing the music” by Dr Amarendra Swarup, Pensions Management
7th August 2008
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“What do you consider to be the biggest issues in longevity today?” featuring John Fitzpatrick, Pensions Week
7th July 2008
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“Beware the deal trip wire” by Dr Amarendra Swarup, Private Equity News
30th June 2008
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John Coomber of Swiss Re joins Pension Corporation’s management team as Executive Vice Chairman
30th June 2008
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Response to the Consultation on “Amendments to the anti-avoidance measures in the Pensions Act 2004” of April 2008
20th June 2008
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Pension Insurance Corporation agrees £451 million insurance transaction with the Delta Pension Plan
5th June 2008
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Pension Insurance Corporation agrees insurance buy-out of Swan Hill Pension Scheme
28th May 2008
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Pension Insurance Corporation announces Longevity Insurance for defined benefit pension funds
22nd May 2008
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Pensions guru shuns retirement
5th May 2008
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Financial Times, Letters – What poses greater risk to the security of pensioners?
23rd April 2008
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telent pension scheme – Powers to revert to the telent trustee board
16th April 2008
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Department for Work and Pensions – Statement re Consultation on the Powers of The Pensions Regulator (TPR)
16th April 2008
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Offer declared wholly unconditional for telent plc
15th November 2007
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Recommended Cash Offer for telent plc
25th September 2007
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Pension Corporation established the umbrella brand for Pension Insurance Corporation, Pension Corporation Investments and other subsidiaries
24th September 2007
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Pension Insurance Corporation hires AAA rated fund manager Mark Gull
30th May 2007
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Pension Insurance Corporation hires Matt Gore from Prudential
30th May 2007
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JPMorgan Worldwide Securities Services wins custody mandate for Pension Insurance Corporation
15th May 2007
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Pension Insurance Corporation licenses Algo Risk
15th May 2007
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Truell on the march with pension reform – Financial News
22nd January 2007
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Paymaster appointed by the Pension Insurance Corporation to provide pensions administration and payment services
5th December 2006
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