Rothesay Life signs pension deal with Merchant Navy

LONDON Wed Dec 12, 2012 11:09am EST

LONDON Dec 12 (Reuters) - The Merchant Navy Officers Pension Fund (MNOPF) has insured almost half its workplace pension liabilites in a 680 million pounds ($1.1 billion) deal with specialist Rothesay Life, part of Goldman Sachs, the biggest such transaction in Britain this year.

The MNOPF's retirement scheme is paying Rothesay Life for a so-called bulk annuity policy that will generate income for the fund's 'old section', which closed in 1978.

The deal means that the pension obligations for the 40,000 members are fully insured, after the MNOPF secured the other half of its staff pension liabilities in a 500 million pound transaction in 2009 and 100 million pound deal in 2010.

Unexpected increases in pensioners' lifespans are threatening workplace pension schemes with extra costs just as unstable financial conditions make it harder for them to meet the costs of retirement income for their members.

This has put pressure on pension schemes to pass on some of their pension liabilities to financially stronger banks and insurance companies.

Activity in pension transfer deals has picked up in the latter part of 2012 as insurers take advantage of pension funds looking to offload their liabilities.

Swiss Re completed an 800 million pound deal with the pension fund of British insurer LV to help it absorb the costs of members living longer than expected, while earlier in December, Tate & Lyle signed a 347 million pound annuity deal with life insurer Legal & General .

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