OPT expects to command "fair share" of bulk buy-out market


29 November 2007

Robin Ellison, chairman of the board of trustees at the Occupational Pensions Trust (OPT), the umbrella group set up as an affordable and flexible alternative to the bulk buy-out insurance model for employers looking to transfer their pension schemes from their balance sheets, has told Pensions Age that he expects OPT to command a “fair share” of the market “if there is one at all” in a year’s time.

OPT, which is Ellison’s brainchild and was launched in September of this year, offers companies the chance to place their pension schemes in a national ‘confederation’ of plans which would allow schemes to continue to operate under their existing arrangements and would cost significantly less than a full buy-out option. In order to enter a scheme into the group a sponsor has to inject a significant amount into the fund in order to ensure that it is over-funded when it enters OPT.

The group claims that its costs can not only be up to 20 per cent cheaper than a buy-out option, but also that the each scheme in OPT would be overseen by a group of highly experienced trustees. Members would be better cared for as their benefits would still be controlled by trustees and so a scheme would remain flexible rather than become a frozen insurance company contract-based one. Additionally, the transfer will not trigger s75 buy-out liabilities.

“Pensions are living organisms,” said Ellison, former chairman of the NAPF, “they need to be run by intelligent people, not systems, as insurance companies do. That’s what they can do with us. We are a home for lost pension schemes.”

Ellison’s optimism for OPT’s future prospects have been bolstered by recent enquiries from “two new sets of clients” that the group had not initially targeted.

According to Ben Shaw development director at OPT, these are companies involved in transactions and those currently being assessed by the PPF.

“Not only can we offer better levels of benefits than the PPF, but we can get a deal done quickly as we don’t for example, need 100 per cent clean data – we can deal with that later,” he said.

“We believe the market may well go our way,” said Ellison, “we offer better value and the opportunity for flexible governance.”

- Pensions Age Nov 2007