You may think it is a little lazy to make a blog out of other people’s comments made on a summer Sunday. But the comments are made by senior people who have experience either senior in insurance (Adrian Boulding) or as Chair of Trustees of DB pensions. (Derek Scott and two others).
And here is John Hamilton , the Chair of Trustees of the Stagecoach Group Pension Plan, which found a way to strengthen the covenant for its members by swapping it.
You can read the blog that is being debated here.
Standard Life insures its own staff pension scheme; did the trustee find Standard Life’s covenant weak?
It is very simple really!
Standard life is pinching the assets of its pension scheme through the profits on the buy-in policy without having to pay tax on surplus distributions. It is also not having to share those profits with the scheme members.
A warning message for any other trustee boards thinking of purchasing bulk annuities – what is the profit margin you are losing to the Scheme!
The purchase of annuities brings with it FSCS protection. 100% of the pension is covered with no upper limit. I have seen a legal opinion that confirms this even in the case of the annuity being provided by a connected company as in this case. Previously the covenant was with the employer and could perhaps have been described as very strong. Now it’s even stronger!
I am very surprised by your legal opinion on the availability of FSCS coverage for buy-in policies.
The FCA Handbook states:
COMP 4.2 Who is eligible to benefit from the protection provided by the FSCS?
COMP 4.2.117/03/2026R
An eligible claimant is any person who at any material time:
1. (1) did not come within COMP 4.2.2 R; or
2. (2) did come within COMP 4.2.2 R, but satisfied the relevant exception in COMP 4.3.
3. [Note: See COMP 4A.2.2G about special cases in COMP 12A.1 (Trustees and pension schemes) and COMP 12A.3 (Collective investment schemes).]
Persons not eligible to claim unless COMP 4.3 applies (see COMP 4.2.1R)
COMP 4.2.2 17/03/2026 R
This table belongs to COMP 4.2.1R
…
(4) Pension and retirement funds, and anyone who is a trustee of such a fund
…
(9) Bodies corporate in the same group as the relevant person in default or, in respect of a claim against a successor in default, bodies corporate in the same group as a successor or the relevant person, as applicable
…
(13) Large companies, large partnerships and large mutual associations
Trustees of pension schemes
COMP 4.3.1017/03/2026R
1. A person is eligible to claim compensation for claims where they are a trustee of:
1. (1) a personal pension scheme;
2. (2) a stakeholder pension scheme (which is not an occupational pension scheme);
3. (3) an occupational pension scheme insofar as members’ benefits are money-purchase benefits; or
4. (4) an occupational pension scheme insofar as members’ benefits are not money-purchase benefits; and the employer is not a large company, large partnership or large mutual association.
“… securing the benefits of around 2,750 members…”
Did the Trustees not feel that the benefits were secure with Standard Life…?
More Trustees are considering that, although the legal aspiration of 100% FSCS cover for a buy-in is clearly set out, whether the practical capacity is finite and untested at the scale now involved, and so Pensions remain safer under the pension regime?
FSCS protection for a bulk annuity buy-in is often presented as 100% with no upper limit. That is generally (noted exceptions) true under the rules for qualifying long-term insurance. But the practical reality is very different from the funded safety-net members enjoy while benefits remain inside a DB scheme under the Pensions Regulator and the PPF.
The current annual levy limit for the Life & Pensions Provision class is only £690 million, which is orders of magnitude smaller than the potential shortfall if a major BPA writer (or several) failed and residual assets after insolvency, reinsurance and recoveries proved insufficient. A single large BPA portfolio can easily run to tens of billions of liabilities. The net cost to FSCS would be the gap after recoveries — not the gross figure — yet a multi-billion or tens-of-billions shortfall would still overwhelm ordinary annual levy capacity many times over.
In such (black swan?) cases the system would have to rely on multi-year levies, any available retail-pool/cross-class contributions, borrowing facilities, recoveries over time, and ultimately the willingness of government and the Insurance industry (including the non-uk participants) to keep payments flowing. Although there is no automatic legal mechanism that scales compensation back pro-rata if funds run short so a notional 100% entitlement remains, the FSCS funding model is pay-as-you-go and is simply not pre-funded to the scale of the risks now concentrated in the BPA market (cumulative liabilities already around £270–300bn).
This is why commentators are increasingly questioning whether FSCS could cope with a major bulk-annuity default without broader systemic support. By contrast, benefits still inside an occupational DB scheme sit under the Pensions Regulator’s covenant and funding regime, with the surplus funded PPF as a properly capitalised, pre-funded lifeboat that currently holds a multi-billion-pound surplus buffer and has clear statutory levy powers across £1.2trn of other pension schemes.
I’m sure Chris Martin, the ReAssure Staff Pension Scheme chair of trustees, is a super fellow.
His firm’s website states that Chris also leads IGG’s trustee appointments on several “high-profile” cases including Co-op Group, Coats plc, Legal & General plc, Atos SE, Northern Foods Limited and Bayer plc.
His style is described by colleagues and peers alike as “inclusive and collaborative”.
By conventional understanding, a collaborator is one who assists an enemy, helping groups to which he does not belong threaten groups to which he does belong.
But I hope I’m completely wrong about this.
As for the “high-profile” cases, a very cursory glance (for which I can only apologise as I wait to watch the delayed and much curtailed final stage of Tour de France 2026) revealed the following:
Co-op: buy-in with Rothesay in 2023.
Coats: buy-out with PIC in 2024, after an earlier buy-in with Aviva
L&G: DB closed, current employees in DC only. I can’t find any mention of legacy staff DB scheme(s) in the 2025 group financial statements, so presumably the amounts (and the accounting policy) are simply not material within the scale of L&G. DC staff pension costs in 2025 were a mere £77m, down from £105m the year before.
Atos – closed DB with deficit recovery payments scheduled to 2032. Market value of assets (which includes some Continental European schemes) declined during 2022 from £3.616bn to £2.440bn, largely because of the allocation to bonds and interest rate swaps, a form of LDI.
Northern Foods – closed DB schemes with deficit recovery payments scheduled to 2034. Market value of assets declined from £1.328bn to £631m over 2022-2024, largely because of the geared allocation to bonds, another form of LDI.
Bayer – closed DB scheme, now in surplus. Total market value of assets has fallen over the years to £1.114bn in 2025, after a partial buy-in with Canada Life in 2023. The scheme is supported by a number of employers, but for example the share of scheme assets reported by Bayer PLC declined from £1.002bn to £649m in 2022, largely because of the allocation to debt instruments.
“Persons attempting to find a motive in this narrative will be prosecuted; persons attempting to find a moral in it will be banished; persons attempting to find a plot in it will be shot.” Mark Twain