The Trustee of the Merchant Navy Officers Pension Fund (MNOPF) has secured around £500 million of pension liabilities through a bulk annuity contract purchased from Lucida plc, an insurance company focused on the annuity and longevity risk business.
The agreement entails Lucida insuring over half of the total pensioner benefits of the Old Section; a section of the fund which closed in 1978 and covers almost 22,000 retired members.
Andrew Waring, the Chief Executive of MNOPF said: “Security has been the Trustee’s watchword in deciding to de-risk, in selecting a provider and in negotiating the contract. This insurance policy takes a significant step along that path and is an important contribution to our wider strategy of progressively reducing risks across the Fund.”
Jonathan Bloomer, Executive Chairman of Lucida, commented, “We are delighted that MNOPF has chosen to partner with Lucida to help them manage their risks and protect their members’ benefits. Our team, our commitment to excellent customer care and our strong capital position enabled us to be successful in this competitive process.”
Watson Wyatt Project Lead and Senior Consultant, Paul Kitson said “Annuities and similar solutions are the ultimate matching asset for pension schemes and protect them from market movements and increasing life expectancy. Multi-billion pound pension funds like MNOPF are looking to de-risk in stages but be ready to move quickly and take advantage of opportunities such as this as they arise”
Robert West, Head of Pensions at Baker & McKenzie who provided legal advice, comments, “The uncertainties of the last year in the financial markets have left many trustee boards with a strong desire to increase members’ security through buy-in arrangements. This agreement between MNOPF and Lucida breaks new ground for industry-wide schemes and provides renewed impetus in the marketplace”.
