Graham & Brown Trustees Agree Buy-In With Pension Insurance Corporation
16 July 2012 (PLANSPONSOREurope.com) – Pension Corporation, a provider of risk management solutions to defined benefit pension funds, has announced that the Trustees of the Graham & Brown Retirement Benefits Scheme have signed a pension insurance buy-in agreement with Pension Insurance Corporation.
The transaction implements a 50% phased premium structure. The Trustees were advised by Xafinity Consulting.
This structure, which covers c.£15m of liabilities, allows the Trustees to insure all the pensioners at the point of signing the transaction, but with only 50% of the premium paid up front. The remaining premium will be spread over five years. Under this structure, the Trustees have immediately insured the key risks associated with paying the pensions, such as longevity, inflation and interest rate. The deferred premium structure was first brought to market by PIC in a pension insurance buyout with the Arnold Laver pension scheme, in September 2010.
Meanwhile, the transaction allows the Trustees to defer the premium needed to insure deflation risk to the point when deflation occurs, saving approximately 5% on the premium for a subset of the insured pensions. PIC has also agreed to administer future retirees as they arise, a feature which manages cost and time for the Trustees.