7 Oct 2021

Buy-in policy improves security of members' pensions

After an extensive review of the insurance market and potential providers, we have entered into a  buy-in policy with Legal & General. This covers all deferred and pensioner members of SPS (there are no active members in the Scheme).

This is a positive development for members and does not affect your pension benefits. Nor does it affect annual cost of living increases (COLA) for pensioners agreed by the Trustee and the Sponsoring Employer up to 2024. The Trustee aims to negotiate a new COLA agreement but there is no certainty at present as to what this might contain.

The contract with Legal & General involves the Trustee paying insurance premiums. In return for receipt of the premiums, Legal & General will make payments to SPS in respect of members’ benefits. The insurance policy is simply held as an asset of SPS and the Trustee retains full responsibility for ensuring that all member benefits are paid but with greater certainty that this can be achieved.

Insuring all members’ benefits removes SPS’s overall exposure to financial as well as other risks, notably increases in life expectancy.

We worked with a dedicated buy-in adviser before selecting Legal & General, which we chose after considering its financial strength as a large global organisation and the fact that it is required to hold reserves against adverse scenarios (with strict regulations monitoring this)..

Legal & General Privacy Policy in relation to the Scheme data can be accessed here.