Thales UK Pension Scheme
Securing your benefits: member updates
Thales UK Pension Scheme
Securing your benefits: member updates
This website has been set up so that the Trustee of the Thales UK Pension Scheme (TUPS) can quickly and easily update members on progress towards our goal of securing members’ benefits through an insurance policy called a ‘buy-in’, with the intention to move to a ‘buy-out’ in due course.
A buy-in policy is an insurance contract where the Scheme pays a lump sum (a premium) to an insurer, in exchange for which the insurer will provide regular payments to the Scheme that match the benefit payments relating to the liabilities covered by the policy. In this scenario, the Trustee would still be primarily responsible for paying pensions to members, but it would have an asset, the insurance policy, supporting that obligation.
Buy-in transaction agreed with Rothesay
The Trustee is pleased to confirm that the Scheme has entered into a buy-in policy with Rothesay.
The policy covers the vast majority of members of the Scheme (there are a relatively small number covered by other, existing insurance arrangements). The buy-in means that the Scheme will receive an income stream from the insurer to match the benefits of all its members, both deferred and pensioner, covered under the policy.
The Trustee is confident that this development should be a significant positive step towards ensuring the security of your Scheme benefits. You can read a recent update from the Trustee here, as well as some frequently asked questions here.
This video explains what a buy-in is, why pension scheme trustees might consider this option, and how they go about selecting an insurance partner.
In this video, the Chair of the Trustee, Peter Rowley, explains the background to the transaction and how the Trustee selected Rothesay as its insurance partner for the Scheme.
Rothesay
Rothesay is a leading UK pensions insurance specialist, purpose-built to protect pensions. It secures pensions for over 840,000 people from schemes sponsored by companies such as Asda, British Airways, the Co-operative Bank, National Grid, Morrisons and the Post Office. Rothesay’s balance sheet strength, expertise and ongoing shareholder support means it is a very good insurance partner for the Scheme. You can find out about Rothesay here or click on the document links below to learn more about these types of de-risking exercises.
The journey to buy-out 2022: then & now
The journey to buy-out 2021: more focused
The journey to buy-out: coming into focus
Why is this happening now?
Many pension schemes experienced significant funding gains in 2022 and 2023, as a result of changing economic conditions, and are trying to lock in security for their members by investing in insurance policies. This is the long-term ambition for many UK pension schemes. These changes in financial conditions have improved scheme funding levels to such an extent that, for many schemes, insurance buy-ins have become a realistic and affordable prospect much sooner than anticipated.
In the case of the Thales UK Pension Scheme, although its funding level has improved, it hasn’t risen by enough to cover the full cost of such a policy. However, Thales agreed to pay a significant contribution into the Scheme that would provide enough funds for the Trustee to be able to afford this.
Previous communications
The Trustee wrote to all deferred and pensioner members of TUPS earlier this year about the proposal it had received from the pension scheme’s sponsoring employer, Thales UK. You can read a copy of that letter here.
The Company initiated a consultation with the active members in TUPS about closing the Scheme to the future build-up of pensions. This is because an insurer will not cover benefits that continue to build up, so all active members needed to become deferred members before the transaction could proceed. The Scheme closed to future build-up of pensions on 30 September 2023 and all active members became deferred members of TUPS at that point.
What does the buy-in mean for me?
What happens next?
At some point in the future, the Trustee and the Company may decide that the Trustee’s buy-in policy should be converted into individual policies which would be held directly in members’ names. This is commonly called a ‘buy-out’. The insurer – and not the Scheme nor the Trustee – would then be responsible for paying the pensions due. These are the same pension benefits as accrued in the Scheme. A buy-out is a common step following a buy-in, and it is likely that the Scheme will proceed on this basis in due course.
We will update members via this website and also via post as and when we know more. Please ensure you let EQ know if your address changes so that we can always reach you.