Additional progress in increasing the security of your pension

04 November 2020

In 2018 and 2019, the Trustee made significant investments called “buy-in” or “bulk annuity” policies with three UK regulated insurance companies as part of the Trustee’s long-term plan to reduce the amount of risk in the Scheme’s investments. This type of investment aims to increase the security of all members’ pensions because it transfers some of the risks being managed by the Trustee, such as life expectancy, interest rates and inflation, to insurance companies for the pensions of a large number of members.

In September 2020, the Trustee and Company agreed to invest a further £750 million in additional policies with two of the existing insurance companies. In total, roughly 80% of the Scheme’s pensioner payments are now covered by buy-in policies. A buy-in is increasingly common and is something lots of pension schemes do to reduce risk.

Members' benefits are not affected by this investment and all pensions will continue to be paid directly from the Scheme in line with the Rules.

Graham Oakley, Chair of the Trustee Board said “We’re pleased to announce the purchase of these additional buy-in policies, which will help reduce risk in the Scheme and increase the security of all members’ pensions. Through a collaborative approach with the Company and our existing relationships with the insurers, we were able to act quickly and get a good price for these investments.”

For more information, please read the Q&A for this announcement.

How a buy-in works:

Put simply, the Trustee invests an amount (called a premium) with each insurer for a proportion of the Scheme’s pensions; in return the insurer guarantees that it will make monthly payments to the Scheme to cover the payments for those pensions. The Trustee holds the policy as an investment and remains responsible for paying the pensions covered.

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