The Merchant Navy Officers Pension Fund (MNOPF) has insured a further £25m (€31m) of liabilities with Rothesay Life, setting in motion the formal wind-up of the scheme’s £1.3bn Old Section.

The fund, with a total of £3.5bn in assets split between two sections, has since 2009 gradually been completing buy-ins with insurers Rothesay and Lucida, which in 2013 was acquired by Legal & General.

The final, £25m agreement with Rothesay will see the benefits of the 22,098 members in the Old Section increase by 2.2%, effective from July.

As a result of completing the buyout of the section, which closed to new members in 1978, it would be “formally wound up within the next few weeks”, the fund said in a statement.

It has been known for several years that the MNOPF has intended to wind up the Old Section, with the scheme contacting members in August 2012 to inform them it planned to “extend [the] programme of insurance to cover the remaining liabilities of the Old Section”.

The letter, seen at the time by IPE, added: “In due course, this would allow the trustee to wind up the Old Section of the fund, which by then would contain no further assets, as these would have been used to purchase the insurance policies.”

In December 2012, the MNOPF then announced a £680m buy-in with Rothesay that, coupled with two prior deals with Lucida worth £600m, covered all outstanding liabilities of the Old Section.

The MNOPF’s chief executive Andrew Waring said the past few years had been very challenging for the scheme.

“Improving the Old Section’s funding position from a little over 80% in 2009 to full funding today, and completing these transactions, have been tremendous achievements in these very difficult markets,” he said.

The MNOPF’s chairman Peter McEwen added that the final transaction with Rothesay was “good news” for members.

“It means certainty and security over pension benefits have now been extended in full to all benefits of the Old Section through the insurance arrangements that are in place,” he said.

“Overall, our members will enjoy greater security than most pension fund members, thanks to the regulatory and capital requirements for insurers, which are more rigorous than those of most pension funds.”

Despite pension entitlements being held by two separate insurers, the scheme has launched a portal – called myMNOPFpension – to grant members a single point of contact for all enquiries and continue to receive a single pension payment.

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