UK - Trustees have expressed interest in the new UK pension fund insurance vehicle, which was revealed exclusively in last month's Global Pensions.
Some of the trustees, who were given access to details of the still secret business plan and product spec, said it could provide a viable alternative to bulk buyouts and agreed it could exempt them from the Pension Protection Fund’s (PPF) risk based levy.
Global Pensions spoke to four senior trustees at major UK pension funds. They said
that while the product looked viable and cost effective, the key to establishing its credibility would be the quality of executives and board members it attracted.
David Blackwood, former group treasurer at ICI, was the only commentator prepared to go on the record. He said: “If I were a trustee, I would be scrambling to get a look at this. It is something they can’t get at the moment. It is a better option to pay a small yearly premium rather than have to buy an annuity.”
He added that in some cases the availability of an insurance option could slow the closures of defined benefit schemes.
Another, who spoke on condition of anonymity, said: “When you are a trustee, the biggest headache is the sponsor covenant. If this product insures you against that, it frees you up from some of your most pressing concerns.”
He added: “I think this could open trustees to a wider spread of investments. It allows you access to a little more risk.”
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