Admin Re closes defined benefit pension scheme to future accrual

Admin Re has closed its defined benefit (DB) pension scheme to future accrual, improved its death-in-service benefit and provided financial education workshops for staff.

The reinsurer had three reasons for the closure. Firstly, its regular review concluded the DB scheme was unsustainable in the long term because of inherent costs and associated risks. Also, the firm has grown significantly in the past five years, so there was a relatively small number of staff in the DB scheme; and there is a group policy in place across the Swiss Re family (of which it is part) to provide defined contribution (DC) pension benefits wherever possible.

The DB scheme has been in place for over 30 years and was closed to new members in 2000. The 280 current DB members, of the firm’s 1,800 employees, have been transferred into the group personal pension (GPP) plan, which is administered by Friends Provident. The staff went through a 60-day consultation from July to September 2010.

Dave Lyons, business delivery manager at Admin Re, said: “Employee perception was mixed, but was generally much better than anticipated based on research into the experience of other companies making similar changes. A strategy of clear, open and factual communications was key to our maintaining positive employee relations during the implementation.”

Admin Re has also improved its death-in-service benefit, said Lyons. “Under the previous arrangement, the DB members received either a death-in-service pension from the scheme or a company pension of 33% of salary. Because these staff have become effectively deferred, now they get 33% plus the death-in-service benefit. Instead of an either/or, it is both.”

The financial education sessions, provided by Friends Provident, were offered on a voluntary basis, with 15 sessions held over 10 days. Topics covered through the ‘My Money and Me’ sessions included: the key characteristics of both DB and DC schemes; how they contrast, such as the build-up of benefits and how they are administered; and the DB landscape in the UK.

The sessions were also tailored to cover more advanced topics depending on the level of knowledge of the employees who attended.

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