The trustee of the Vesuvius Pension Plan has signed a fifth pension insurance buy-in with the Pension Insurance Corporation plc.

The scheme is for employees of molten metal flow engineering company Vesuvius. The deal sees the total amount of liabilities covered by PIC in excess of £400m, at current market rates, representing around 50 per cent of the plan’s total pensioner liabilities.

The original buy-in, signed in 2012, covered around £320m of pensioner liabilities, with follow on transactions allowing the trustees to “roll-in” future retirees into the buy-in policy, on an annual basis for a number of years. The trustee and PIC have now extended the arrangement with an innovative, evergreen, open-ended agreement to add future tranches upon meeting various pre-agreed parameters. This creates greater certainty for the trustee in delivering their aim of fully insuring the pension scheme over time.

Vesuvius plc chief financial officer Guy Young said: “De-risking the UK plan in this way, by removing the inflation, longevity and interest rate risks for the insured liabilities, will reduce still further the level of volatility to which Vesuvius is exposed in future pension funding costs through its sponsorship of the UK Plan. This latest buy-in agreement represents a further demonstration of the Company’s intention to work with the trustee to de-risk the UK plan in a managed way.”

In addition, Vesuvius trustee chairman Allan Course said: “We are delighted to have been able to work with the team at PIC to secure a new tranche of pensioners, building on the four previous transactions completed with them. This further improves and increases the security for the members of the Plan.”

PIC senior actuary Tristan Walker-Buckton said: “The Vesuvius Pension Plan Trustees have been forward thinking and proactive in seeking to manage their pension risk. They were one of the original trustee boards to have agreed terms for an automatic roll-in of future pensioners and are again one of the first to conclude a similar agreement under Solvency II. We look forward to a long partnership with the trustees.”

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