The Trustee of the £3 billion Merchant Navy Officers Pension Fund (MNOPF) has secured £490 million of members’ pension benefits through a buy-in transaction with Legal & General Group.
The MNOPF was an early and significant adopter of innovative de-risking transactions, having completed its first bulk annuity transaction back in 2009 with Lucida Limited, which was acquired by Legal & General in August 2013.
Today’s announcement follows a £1.5 billion longevity insurance transaction covering the benefits of the Fund’s ‘New Section’ members in 2014, and the new buy-in arrangement covers all the Fund’s retirees since that date meaning the benefits of all current pensioners are now hedged 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.”
Chris DeMarco, Managing Director of UK Pension Risk Transfer for Legal & General said: “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 of the MNOPF, said: “Securing the benefits of our members has always been a significant part of the MNOPF Journey Plan. Our next milestone is to promote and grow the Ensign Retirement Plan, so that we can provide the same security in retirement for the next generation of maritime employees.”
Willis Towers Watson advised from the actuarial and investment side and Baker McKenzie on the legal side of this transaction.