The £11.6bn Natwest Bank Pension Fund and the £2bn Royal Bank of Scotland Pension Scheme are to merge by the end of the year.
The two combined defined benefit schemes – which have over 71,000 active scheme members – will continue to be open to new members.
Natwest Bank Pension Fund finance manager Charles Mills said both schemes had to ensure that the interests of scheme members were protected so that one group was not disadvantaged at the expense of the other.
“The merger is still in the planning stage but no insurmountable obstacles have been identified. The trustees of both schemes will need to agree to the final proposals. The next step is for lawyers and actuaries to report back to the trustees in October, paving the way for the merger possibly at the end of the year.”
The merger – prompted by the Royal Bank of Scotland’s acquisition of Natwest Bank in March last year - may result in a review of the two schemes’ asset allocations, consultants, actuaries, lawyers and administrators. All appointments are yet to be made.
The two schemes both have sole managers – Newton Fund Managers for Royal Bank of Scotland Pension Scheme and Gartmore Investment Management for Natwest Bank Pension Fund.
However, the location at which the combined scheme will operate is still to be decided. Mills said: “It is logical to have the merged scheme at one base. This would mean scheme members would have one a point of contact which would reduce confusion especially in the transitional period.”
He said the main advantage for the merger is that the two schemes have similar funding levels and will need little adjustment to their current asset allocation.
Mills added: “Individual members may have been initially suspicious of the motives behind the merger proposals thinking that somehow they would miss out but this is not the case. Part of process is to ensure that the security of both schemes is not upset.”
The Royal Bank of Scotland Pension Scheme is advised by William M Mercer and the NatWest Bank Pension Fund is advised by Watson Wyatt.
By Michael Schiniou
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