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.
The MNOPF is an industry-wide pension scheme that enables shipping organisations to provide retirement and death benefits to officers. It currently has a fund of £3 billion.
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.”