The Trustee of the £3 billion Merchant Navy Officers Pension Fund (MNOPF) has secured a buy-in transaction with Legal & General, worth £490 million of members’ pension benefits.
The buy-in hedges the benefits of all current pensioners against longevity risk.
MNOPF Chair, Rory Murphy, said; “This buy-in enables us to more effectively manage the risks faced by the Fund as a whole. It is also good news for employers in the maritime and shipping industry, who have already saved many millions in deficit contributions over recent years as a result of our improved funding position.
“There is also a positive message here for the wider pensions community. A well-run fund, with strong governance and expert advisors, can deliver valued and sustainable benefits to its members while successfully managing the risks and costs faced by its employers.”
The transaction follows a £1.5 billion longevity insurance transaction covering the benefits of the Fund’s “New Section” members in 2014.
Chris DeMarco, Managing Director of UK Pension Risk Transfer for Legal & General, commented; “We are delighted that the MNOPF Trustee chose to work with Legal & General and ultimately secure their members’ benefits with us.
“Our relationship with the Trustee has been a long-standing one and we are pleased to be able to assist them in the next stage of their de-risking journey.”
Andy Waring, Chief Executive Officer (CEO) of the MNOPF, added that the next “milestone” will be to promote and grow the Ensign Retirement Plan, so the same security in retirement can be provided for the next generation of maritime employees.
Re/insurance broker Willis Towers Watson and Baker McKenzie advised on actuarial and legal arrangements of the transaction.
The MNOPF has been de-risking transactions since 2009, when it completed its first bulk annuity transaction with Lucida Limited, which was acquired by Legal & General in August 2013.