In the fourth part of our series looking at what firms did to win accolades at this year's UK Pensions Awards, PP speaks to Pension Insurance Corporation head of origination Jay Shah about how the firm won the Risk Reduction Provider of the Year category.
Video: PIC head of origination Jay Shah
PP: What does it mean to win this award?
JS: We are delighted to be the joint winners of this award. It means a lot to our employees for their hard work with our many customers to be recognised by the industry.
PP: What do you believe sets you apart from your peers and contributes to this success?
JS: Quite simply it's our focus on our customers and putting them at the heart of what we do: we pride ourselves on bringing flexibility and innovation to shape transactions that meet the needs of pension fund trustees and corporate sponsors; once the deal has been signed and we enter the transition process, we provide the trustees with a clear route to achieving their objectives as well as keeping a close eye on what the members' experience through the transition process. And after the members have fully transitioned to become our policyholders we seek to provide them with very high levels of customer service.
One example of this are the events we put on at which our policyholders are able to meet and question senior management from the company that secures their benefits, bringing transparency and accountability.
Many past attendees have told us they enjoy these events as they give an opportunity to reconnect with former colleagues and reminisce about days gone by. They help to create a community, building on the values formerly intrinsic to the defined benefit pension system. We are starting to see policyholders meet up outside of these events and form their own, new social groups.
PP: What are the key challenges facing your pension scheme clients and how are you helping them address these issues?
JS: The main challenge facing our pension scheme clients is affordability. With gilt yields regularly hitting historic lows we try and proactively work with trustees to suggest how they might be able to take advantage of windows of favourable market conditions.
We also work closely with them in terms of innovative structures, such as deferred premiums, deflation floors and insurance of specific member tranches to remove as much risk from the scheme as possible at any one time. We find that trustees appreciate this level of customer service.
There is increased interest in buyouts and buy-ins from trustees, but there is usually a lot of preparatory work that needs to be one to explore the viability of the proposed solution. To that end, it is vital that trustees set up proper governance structures so that insurers can see they are serious about transacting and are able to move quickly to seize windows of opportunity in the markets.
PP: How will you continue to improve your services to pension scheme clients over the coming 12 months?
JS: We will continue to put innovation and flexibility at the heart of our service for trustees.
Extract from PIC's original UKPA submission
In June 2014, Pension Insurance Corporation completed a complex, innovative pension insurance buy-in with the Total UK Pension Plan, covering £1.6bn of pensioner liabilities.
This was the second largest buy-in to date, which all parties were keen to complete within a tight timeframe.
The transaction included the design and implementation of an additional, innovative security structure, which built on the high levels of security inherent to the insurance regime.
The liabilities related to 13 historic pension schemes which had been merged into one scheme, which meant there were many more benefit specifications than normally expected in such a transaction.
PIC simultaneously entered into a longevity reinsurance transaction at point of contract.
In addition to this, in February 2014 PIC issued annuity policies to individual members of the EMI pension fund, just seven months after the largest ever pension insurance buyout, which covered £1.5bn of liabilities and 20,000 members.
Every member was written to within one week of the transaction happening and dedicated helplines set up - but, due to well-designed written communications, fewer than 2% of members called the helpline, well below typical industry levels.
In addition to this, PIC expanded its range of policyholder events during the year - and almost 2,000 of its policyholders attended functions that PIC ran in London, Birmingham, Manchester and across the country during the year.
PIC has also achieved excellent complaint levels - holding the best record in its sector, with just 0.64 FCA reportable complaints per thousand policyholders for the first half of 2014, its best ever score.
It also has excellent levels of member satisfaction - with some 99.8% of policyholders reported being satisfied or more than satisfied with its service, and 86% giving the insurer the maximum score.
The UK Pensions Awards 2015 Winners’ Series
- How LaSalle Investment Management won the Alternative Investment Manager of the Year award
- How LCP won the Risk Reduction Adviser of the Year award
- How LGT Capital Partners won the SRI / ESG Provider of the Year award
- How PIC won the Risk Reduction Provider of the Year award
- How Spence won the Consulting Innovation of the Year award
The number of defined benefit (DB) scheme members with benefits protected by an insurer will double by the middle of the decade, according to Lane Clark & Peacock (LCP).
Aviva Life & Pensions has concluded an £875m buy-in with its own staff pension scheme, following on from a similar transaction last year.
Just Group has completed a £74m pensioner buy-in with the UK pension scheme of a US-listed engineering business.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.