Questions and Answers
Why is the British Tourist Boards’ Staff Pension and Life Assurance Scheme being sectionalised?
Discussions between the stakeholders in recent years on the funding of the Scheme and the proposals last year by VisitBritain to cease defined benefit accrual showed a need for all the participating Employers: VisitBritain and VisitScotland, as well as the Welsh Government, to have greater flexibility and independence from one another in their dealings with the Trustees. Sectionalisation provides this because each individual section is run separately by the Trustees, with different funding arrangements and investment strategies within the legal framework of the overall Scheme.
For the sake of clarity, the Trustees have managed the assets of members of the former VisitLondon (London Tourist Board) within a separate section since 2011 and this existing arrangement is unaffected by this new announcement.
What are the guarantees?
Each participating Employer’s sponsoring government promises to ensure that the relevant section is fully funded and able to pay benefits to or in respect of members as they fall due for payment. As such the British Government via the Department for Digital, Culture, Media and Sport (DCMS) guarantees the pension benefits of VisitBritain/VisitEngland members, and the Scottish Government guarantees the pension benefits of VisitScotland members. The Welsh Government has already agreed a funding arrangement in respect of the pension benefits of Wales Tourist Board members*.
Were the pensions already guaranteed?
Whilst the participating Employers are required to guarantee the pensions of their members and each participating Employer is funded by its sponsoring government, there were no formal guarantees from the British and Scottish sponsoring governments in place beforehand.
Is the sectionalisation part of a restructuring programme for any of the employers?
Whilst each participating Employer is funded by its own sponsoring government, each of which can change how it wants to fund or operate, both the Trustees and the participating Employers are not aware of any proposals to restructure any of the employers.
What about the Pension Protection Fund (PPF)?
By way of an introduction, the purpose of the statutory Pension Protection Fund is to protect people, in accordance with and to the extent required by legislation, with a defined benefit pension when an employer becomes insolvent.
Where members’ pension benefits have a government guarantee, there is no need for the section to be eligible for the PPF. The VisitLondon Section was assessed for entry into the PPF with VisitLondon Limited becoming insolvent in 2011. It was sufficiently well funded that it did not need to enter the PPF.
Will my pension change?
Sectionalisation does not change your accrued pension benefits. Any proposals to change future benefits, such as those made last year by VisitBritain, are a matter for the participating Employers and any changes require the consent of the Trustees and must comply with legal employee consultation requirements. Benefits already accrued are protected under legislation.
*Visit Wales ceased to participate actively in the Scheme in 2009 but members who are current employees have a salary link for the calculation of their pension at retirement.