PIC plc Covid-19 update
19 March 2020
As the exceptional and fast-moving circumstances surrounding the outbreak of Covid-19 continue to develop, we wanted to outline the measures that Pension Insurance Corporation plc (“PIC”) has in place to maintain the seamless level of service you have come to expect from us.
The considerable time and effort we have put into business continuity planning over the long-term means that we are well placed to continue fulfilling PIC’s purpose of paying the pensions of our current and future policyholders. We have enacted measures across the business that are demonstrating PIC’s resilience and agility in the very unusual set of circumstances in which we find ourselves.
In particular, PIC has been taking an active, serious approach to what was then a potential pandemic since late January. This led to the full review, testing and refining of our specific pandemic business continuity plan (BCP), including working closely with our outsourcing providers to ensure continuity of service.
The measures that we have in place include:
Following a short transition period, all of our employees will be working from home by the end of this week. They all have laptops suitable for their roles and over the past couple of years we have invested considerably in the technology to ensure remote working is seamless, including excellent video conferencing facilities, and secure, by implementing extensive cyber security measures which take into account their multiple locations. In our BCP testing, and so far in the current situation, this has all broadly worked as planned. Our IT team are working through any remaining issues as they arise.
We are therefore confident that our systems and processes are robust enough to allow business as usual even during a sustained period of remote working. As well as the practical details of how our people are able to work, we also have extensive plans to ensure their welfare over a potentially long period of social isolation, including access to counselling, if they feel the need.
Policyholders and trustee payments
Our business continuity planning has included detailed working with all of our outsourcing providers. As such, we are confident in their resilience and therefore our ability to maintain high service levels for all our policyholders. However, reflecting the complexity of the situation we are in regular discussion with them to ensure we anticipate and respond effectively to any changes.
With regard to the resilience of our processes and systems for payments to policyholders, we make payments by standing order three times a month and this requires no human intervention. We do not anticipate any issues with these payments. However, as is prudent, we are monitoring this carefully.
The funding for trustee accounts comes directly from PIC. The process to authorise and make payments to trustees continues to be business as usual and is unaffected by the working from home arrangements. PIC has always made arrangements to ensure trustee accounts are funded ahead of the payment date, and during this time additional governance has been put in place to review the schedule of payments on a daily basis. As with the payments to policyholders, we do not anticipate any issues with these payments, but as a necessary precaution we will also monitor them carefully.
As the 2019 Pension Insurance Corporation Group year-end report and accounts, published on 9 March and available on our website, show, during 2019 we positioned our credit portfolio in anticipation of a potential worsening of the economic environment by moving into even more secure assets than we had previously held.
At year-end, we held 44% of our portfolio in cash and liquidity funds, and in UK government debt. 53% of the portfolio was held in corporate bonds, 98% of which were rated investment grade, and no single counterparty, other than the UK government, represented more than 2.3% of our portfolio. We have been closely monitoring, and reacting, to the significant market dislocation and we are working with our portfolio managers on appropriate measures.
Our solvency ratio at 31 December was 164% (2018: 167%) and in January, well before this crisis broke, we announced a capital raise from our existing shareholders of £750 million to support expected new business growth this year.
We are therefore confident in our solvency and liquidity positions, as well as our ability to manage the portfolio through the consequences of any economic downturn.
PIC has been proactive in our approach to the situation, prioritising the welfare of our employees as an integral part of our purpose and values, helping them to continue to deliver over a sustained and challenging period. This is supported by specific investment in our ability to maintain business-as-usual levels of customer service, whilst seeking to play our part and limit the spread of the virus.
Events are clearly very fluid, but we are well placed to manage the evolving situation, and culturally we are well adapted to understanding and respecting our wider social responsibilities. We will be monitoring events and we will adapt our plans and policies and respond as the situation requires.