Shipping trade groups offload pension liabilities

LONDON Mon Jan 7, 2013 12:04am GMT

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LONDON (Reuters) - British insurer Pension Insurance Corporation (PIC) is taking on 40 million pounds of pension liabilities from two shipping trade groups, as pension providers look to limit their risks amid rising longevity and volatile markets.

The deal with the UK Chamber of Shipping and the International Chamber of Shipping covers the current pensioners of the Trustee of the Chamber of Shipping Retirement Benefits Plan, which provides the pensions for the two trade associations, PIC said on Monday.

The two shipping associations are transferring part of their total pension liability risk to PIC in a so-called "buy-in" deal, where gilts are exchanged for a matching insurance policy.

Pension funds are struggling to cope with extra costs from people living longer in retirement and are also finding it tough to generate adequate returns due to market volatility since the financial crisis.

As a result, insurers and reinsurers are capitalising on increased demand from pension funds for ways to manage their liabilities by underwriting individual pension funds and charging a fee.

The UK Chamber of Shipping represents 140 members from across the UK maritime sector, while the International Chamber of Shipping represents over 80 percent of the world's shipowners and operators.

(Reporting by Sarah Mortimer; Editing by Mark Potter)

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