Issued on: 15 September 2008
The Pensions Trust, the leading multi-employer scheme in the UK for the charitable, social, educational, voluntary and not-for-profit sectors, has selected Paternoster to secure the benefits of the pensioner section of the Growth Plan through the purchase of an insurance policy. The assets secured by Paternoster are in excess of £225m.
John Alleston, Chair of Verity Trustees, The Corporate Trustee of The Pensions Trust, commented: “The Trustee’s prime concern is ensuring that members receive their benefit entitlement. We have been working on solutions to reduce the downside risks that the Growth Plan was exposed to. Having taken advice from HSBC and Mercer, the Trust’s Actuarial and Investment Consultants and discussed the way forward with the consultative group representing the employers, we decided that investment in a bulk annuity policy from Paternoster offered the best first step to give Growth Plan members greater certainty and additional security and protection. We will review opportunities to insure the deferred member liabilities as and when funds allow.
The decision to reduce downside risk was not straightforward for the Growth Plan because it also all but eliminates the prospect of future discretionary bonuses. But we have to be realistic and prudent in a world which economics and legislation has made much more difficult for pension funds generally and the Growth Plan in particular. The Trustee has acted solely in the best interests of members and is pleased to have been able to secure pensioners benefits with Paternoster”.
Stephen Nichols, Chief Executive, The Pensions Trust commented: “As with many defined benefit pension schemes under pressure as a result of lower investment returns, improvements in longevity and the unintended consequences of legislation, the investment in an insurance policy with Paternoster, a regulated insurer, offers increased security for Scheme members. The solution selected means that pensioner liabilities have been fully matched by the policy. The way the pensions are administered is unchanged. Paternoster will make payments to The Pensions Trust each month so that the Trust continues to make pension payments as before.”
Mark Wood, Chief Executive, Paternoster added: “The security of members’ pension benefits is our prime responsibility. By transferring the Scheme’s obligations to a regulated insurance company, the promise to pay pensions is supported by prudent reserving, solvency capital and a conservative investment strategy, all of which are managed within a regulatory framework overseen by the Financial Services Authority.”
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