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18 February 2008
Punter Southall comments on the nationalisation of Northern Rock
In response to the nationalisation of Northern Rock, Richard Jones, Principal at Punter Southall, the actuarial consultancy firm, commented:
“The nationalisation of Northern Rock is excellent news for the Trustees of its pension scheme
which now have the Government standing behind the scheme, removing all concerns over
security which had existed prior to Sunday’s announcement. The potential shortfall in the
scheme, had Northern Rock become insolvent, has been estimated by the Trustees to be £150
million to £200 million.
The Trustees had already moved 93% of its assets into gilts (debt securities issued by the
Government) which would, in effect, be illegal for a private sector scheme as investment in
securities issued by its ultimate sponsor would be considered as ‘self-investment’.
If the nationalisation is only a temporary measure as has been suggested, it will be interesting to
see whether or not the Government seeks Clearance from the Pensions Regulator when
Northern Rock is returned to the public market and the Trustees once again become dependent
on the covenant provided by the bank itself.”
For more information or to speak to Punter Southall, please contact:
Penrose Financial
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