On the go: Insurer Aviva has secured a £150m buy-in contract with the General Healthcare Group & Life Assurance Plan.
Announced on Monday, the deal was concluded ahead of schedule during the height of the coronavirus crisis in March, and will cover all 700 members of GHC’s defined benefit scheme.
The scheme had faced the dual pressure of a £27m deficit and financial constraints from its sponsor, BMI healthcare. The deal with Aviva concludes a long relationship between the scheme and consultancy Redington, which had been tasked with securing its long-term future.
“Our focus was to establish a clear framework that would put the trustees in full control and get all stakeholders behind a shared objective,” said Mette Hansen, director at Reddington.
“For [this scheme], this objective was to generate sufficient investment returns to minimise the pressure on the sponsor, but importantly in a highly risk-managed way that enabled the trustees to retain full control in all market conditions.”
“With the current market downturn putting those with funding challenges under increasing pressure, this case shows that there is a workable solution for everyone, regardless of sponsor strength, scheme size and budget, given the right long-term funding plan and a strong governance framework,” she added.
Rita Powell, founder of Inside Pensions and chair of trustees of the GHG Pension Plan, said: “We knew we needed a radical change in approach to overcome our difficulties, but as a small scheme with minimal resources we had to think differently to find the right solution.”
“By focusing carefully on what really mattered and working closely with the sponsor and our investment and governance experts, the trustee was able to come up with a long-term funding plan that worked for all parties,” she said.
