Group Risk Plan: Investment

This is only relevant when insuring either a survivor’s pension, children’s pension or disability pension and where it is agreed that Nordben will increase the pension whilst in payment.

The pensions are provided from the Pensions in Payment policyholder fund. The fund currently invests in long-term fixed interest bonds, equities and hedge funds. Nordben aims to invest an appropriate percentage of its assets in fixed interest bonds so that it can broadly secure the guarantees underlying the Plan.

Having prioritised covering these guarantees, the remaining funds are then invested to secure the best return for policyholders within an acceptable level of risk.  Nordben currently invests the funds in a mixture of equities and hedge funds.  The proportion of equity and hedge fund investments is determined with the aim of maximising returns relative to risk (due to the relatively low volatility and correlation over time of hedge funds compared to equities).  A prudent approach to investing in hedge funds has been taken by limiting the proportion invested in such funds to date.

The increase is declared by the Board of Directors having regard to the advice of the Actuary. The increase can be 0%. The increase for Pensions in Payment is not expected, necessarily, to remain at constant levels from year to year, as increases in annuities are determined having regard to price inflation for the period September to September in the currency of the annuity. This is a target and not a guarantee as the increase could be higher or lower. The target may change over time.