Investment news – Trustee enters £1.7 billion longevity insurance policy with Zurich UK and PICA
Posted on: 21/06/2023
Nationwide Pension Fund is pleased to announce that the Trustee has entered into a £1.7 billion longevity insurance policy with the UK insurer Zurich Assurance Ltd (Zurich UK) and the reinsurer The Prudential Insurance Company of America (PICA).
The policy, arranged with the full support of Nationwide Building Society, insures a key risk by transferring from the Fund to Zurich and PICA, the risk that pensioners and their dependants live longer than expected. It provides the Trustee and the Society with more certainty over future funding costs and improves the security of members’ benefits.
Pensions will continue to be paid, on behalf of the Trustee, by the Fund Administrator, Buck. There is no impact to your benefits in the Fund.
When asked about the transaction, Catherine Redmond, Chair of the Fund’s Trustee Board and Trustee Executive for BESTrustees Limited said “This transaction is an important step in ensuring that members’ benefits are secured against unexpected increases in life expectancy. This is great news for the Fund and its members, transferring risk and helping to further protect our members’ pensions. We as a Trustee Board are delighted to have taken this additional step on our long-term de-risking journey. The Trustee is grateful to Aon and Sackers for their support and looks forward to working closely with the Zurich UK and PICA teams.”
Here are some questions and answers about the transaction:
Q. How does the longevity insurance policy affect the Fund?
A. The policy works by the Trustee committing to a fixed schedule of payments, based on the Fund’s current estimate of the pensions due to members and in particular, the current predicted life expectancy of the insured Fund pensioners and dependants. In return, the Fund will receive payments which reflect the pensions based on the actual longevity of the insured Fund members, be this shorter or longer than the current prediction. There are no changes to individual members’ pension benefits from the Fund, or to how pensions may increase in the future.
Q. I’m receiving a pension income, how will the policy affect me?
A. The policy is held by the Trustee, so members receiving a pension income won’t see any difference in their income or communications from the Trustee. The obligation to pay pensions to the Fund’s members remains with the Trustee, not with Zurich or PICA. We encourage you to keep your details up to date, which can be done easily online on the Member Portal.
Q. I’ll take my benefits in the future, how will this affect me?
A. The policy is held by the Trustee and does not make any difference to the way in which your benefits will be paid in the future, and you won’t see any difference in how your benefits are calculated or in communications from the Trustee or Buck.
If you need to register for the Member Portal or want to see how to update your details, you can see our how to videos.