MNOPF agrees further buy-in
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The trustees of the Merchant Navy Officers Pension Fund have signed a £400m buy-in covering nearly 2,000 pensioners.
The roughly £3bn fund decided to insure another chunk of pension benefits with Pension Insurance Corporation. The transaction with PIC follows a £1.6bn deal with the firm completed two years ago, in which PIC took over the pensions of around 14,000 members by converting a longevity swap held between MNOPF and Pacific Life Re.
The MNOPF hit several derisking triggers over 2020 and 2021; in summer 2021 its funding level reached 102%.
It has already conducted a number of risk transfer exercises, insuring its Old Section in 2009 with Lucida – later acquired by Legal & General – as well as with Rothesay Life in 2012. These bulk annuities were converted to a buyout of the section in 2014. In late 2017, the trustees agreed another buy-in of £490m of liabilities with L&G.
It has already conducted a number of risk transfer exercises, insuring its Old Section in 2009 with Lucida – later acquired by Legal & General – as well as with Rothesay Life in 2012. These bulk annuities were converted to a buyout of the section in 2014. In late 2017, the trustees agreed another buy-in of £490m of liabilities with L&G.
This buy-in is another key stage in the fund’s derisking journey, said trustee chair Rory Murphy, adding that it "helps to provide greater certainty to members about the security of their benefits, and we are delighted to have completed it with PIC, who we know well from our existing transaction”.
Murphy previously said that the fund would hit peak outflow in 2026, suggesting that the trustees might need to take a decision about whether the scheme should continue at that point or sooner.
Murphy previously said that the fund would hit peak outflow in 2026, suggesting that the trustees might need to take a decision about whether the scheme should continue at that point or sooner.
For the latest deal, the trustees were advised by Nadine Reid, director at Willis Towers Watson. WTW also looks after the fund’s investments. “The MNOPF trustee is dynamic and open to innovation, which has enabled them to secure another important derisking step by seizing a transaction opportunity when it arose,” said Reid.
Uzma Nazir, who heads up origination structuring at PIC, said: “We worked closely with the trustee over several months to actively monitor market conditions and ensure that we were able to transact quickly once market conditions were favourable.”
