The Merchant Navy Officers Pension Fund (MNOPF) has completed a £490 million pensions buy-in transaction.
The buy-in transaction, which was completed with Legal and General, will cover all MNOPF’s retirees since 2014, to ensure that pension benefits for retired members are hedged against longevity risk.
The buy-in transaction is the latest de-risking approach taken by the scheme. Previous action includes a £1.5 billion longevity insurance transaction that was completed in 2014. This covers the benefits of the fund’s ‘new section’ members up to this date.
This is the fourth buy-in transaction completed by the scheme trustee to date. Two initial buy-in transactions were completed with Lucida, which was later acquired by Legal and General, in both 2009 and 2010. These bulk annuity arrangements covered £600 million of the scheme’s ‘old section’ liabilities. A subsequent buy-in with Rothesay Life covered the remaining liabilities outside of the Legal and General transactions, and a full buy-out transaction to cover all of these liabilities was completed in 2014.
Consultancy Willis Towers Watson and law firm Baker McKenzie advised on the transaction.
Rory Murphy, chair at MNOPF, 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, which 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.”