Paternoster, one of the newest entrants to the bulk annuity market, has completed its 10th transaction in less than six months of operation.
The company, run by Mark Wood, former chief executive of Prudential, gained approval from the Financial Services Authority on 27 June this year, and was the first of a number of companies headed by ex-Prudential staff to be set up and designed specifically for the bulk annuity market.
Now Paternoster has secured its tenth transaction after announcing the payment of pensions in respect of the Chartered Accountants’ Employees Superannuation Scheme will transfer to Paternoster in spring 2007.
Under the new deal Paternoster, which will start paying its first pensions on 15 December to members of the Cuthbert Family Health Plan, will become responsible for the payment of pensions to 962 pensioners and 3232 deferred members.
The news comes as the Pensions Regulator today released a discussion paper on the potential abandonment of defined benefit (DB) schemes in which it said employers were unlikely to choose the insured buy-out route as a way of minimising risk because of the expense.
It revealed on average it costs employers 50% more to buy a bulk annuity from an insurer such as Paternoster, or Synesis Life, compared to the calculation of its liabilities using Financial Reporting Standard 17 (FRS17).
However Roger Lawson, trustee of the Chartered Accountants’ Employees Superannuation Scheme, says: “Our primary concern has been to ensure long term security for our scheme members and we agreed transferring to an insurance company was the best way to mange this.”
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