News

The trustees of West Ferry Printers Pension Scheme have transferred the liabilities of the scheme to Norwich Union in a 'pensioner buy-in' deal.

All 1,300 defined benefit members will remain in the scheme and will continue to receive payments as before, however the annuities are now backed by the FSA-regulated insurer.

John Pannett, chairman of the trustees, said: "The trustees were keen to improve security of members' benefits while taking advantage of the current competitive pricing in the market."

Under the terms of a pensioner buy-in policy – a route that is becoming increasingly common – a board of trustees will transfer some of the scheme's assets to an insurance company, which will then assume the pensioner liabilities.

The scheme is essentially investing in an insurance asset to reduce its risks.

Michael Gardner, finance director of the BPIF, said that it was a good way for printers with a small surplus to guarantee payments.

"Companies pay a small premium to have the scheme taken off their balance sheets and most do it with a small surplus," he said.

"If the scheme has a large deficit however, most won't be able to afford for it to be taken off the balance sheet."

Donald Fleming, director of pensions advisory at Gazelle Corporate Finance, said the concept has developed significantly over the past 18 months with more and more providers entering the market.

"More players in the market means more competition," he said. "However, it is crucial that each board of trustees chooses the right insurer on the right terms for its scheme.

"Buy-ins are major events for any scheme. Current market events show the importance of a specialised due diligence and selection process to ensure the deal is correctly structured on the most competitive terms."

West Ferry Printers Pension Scheme was advised by Lane Clark & Peacock.