FAQs

What is a buy-in?

A buy-in is effectively an insurance contract where the Scheme pays a lump sum (a premium) to an insurer, in exchange for which the insurer will provide an income that exactly matches the benefit payments to those members covered by the contract.

A total buy-in would mean that the Scheme receives an income to match the benefits of all members as they become due.

Under a buy-in, the policy is an asset which belongs to the Scheme and is not assigned to individual members. The Trustee of the Scheme remains responsible for paying benefits to all members. It does not affect the way in which any members receive their pension or change any of the benefits they are due from the Scheme.

How would a buy-in policy affect the security of my benefits?

The Trustee is responsible for investing the Scheme’s assets and making sure there is sufficient money to pay benefits as they fall due. By entering into a buy-in policy, the Trustee would own an investment which would provide a better match for the pensions it needs to pay. In particular, the policy would aim to protect the Scheme from future changes in life expectancy, and changes in financial conditions such as long-term interest rates and price inflation, which can affect the funding position of the Scheme. The overall impact of a buy-in would mean that members’ benefits are more secure as the income received from the insurer would match the benefits paid from the Scheme.

What are the benefits to the Company of a buy-in?

The buy-in policy would help to remove the risk to Sony of future rising pension costs, by paying the insurer to take on the risk.

Will I still be a member of the Scheme?

Yes. A buy-in transaction does not change the position of any individual members. All members remain members of the Scheme, as long as they do not transfer their benefits out of the Scheme.

How do you work out how much to pay the insurance company?

There is obviously a lot of work involved to establish what the combined value of all members’ pension payments might be over the next 20, 30, 40 years or longer, and what would be a fair ‘price’ to pay for this policy. These calculations are carried out by specialist actuaries, in a similar way to the calculations that go into our triennial valuations. The more accurate the data we hold about our members, the more accurate the quotations from the insurers will be, and the more certain we can be about the level of protection offered by the policy.

Have you selected an insurer?

No, the Trustee and its advisers will obtain quotations from a number of leading insurers once our member data is up to date, probably towards the end of the year.

What happens if an insurer goes bust?

There are considerable protections in place against the possibility of an insurer becoming insolvent, with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) regulating this area. Ultimately, these types of policies are covered by the Financial Services Compensation Scheme, which would mean that the Trustee would be eligible for compensation if the insurer was not able to meet the payments under the buy-in policy.

When do you expect to have completed the total buy-in?

The aim is to complete the buy-in by 31 March 2021. However, the Company and the Trustee will run a member options exercise in the second half of 2020, similar to an exercise we ran in 2018, whereby deferred members can take advantage of paid-for financial advice to explore their options for taking their Scheme benefits, including the option to transfer their benefits out of the Scheme in order to access more flexible options.

Will the Scheme share my personal data with the chosen insurer?

Once we have chosen an insurer, we will need to provide them with information, which includes the personal data of members that is relevant to the recording and management of their payments to the Scheme. The insurer will be required to comply fully with the requirements of the General Data Protection Regulations to ensure that this data is properly protected.

What will happen to my pension if the buy-in goes ahead?

Your pension benefits will not change and if you are currently in receipt of a pension, you will continue to receive that from the Scheme in the same way as you do now. Neither will this alter the nature of any benefits which may be payable to your dependants following your death. Willis Towers Watson will continue to administer your pension on behalf of the Trustee, and you should continue to direct all correspondence to them, just as you have done in the past.

What is a buy-out?

Under a buy-out, the Scheme’s liabilities are transferred to the insurer and the sponsor’s obligation to the members ends. In a buy-out, the insurance policy purchased as part of the buy-in would be converted into individual policies for each member, and the insurer would take on the responsibility for paying members’ benefits. This is not automatic, as often the Company would have to inject further cash to achieve this. A buy-out is a common step following a buy-in, although not guaranteed.

Do I have different options for taking my benefits, depending on whether the Scheme enters a buy-in or a buy-out?

In the event of a buy-in, the Trustee will remain responsible for setting the factors that determine your options (transfer value, early retirement and cash commutation) until the point in the future when a buy-out is triggered.

If the Scheme proceeds to a buy-out, each member will be assigned an individual insurance policy. From this point the insurer will be responsible for paying members’ pension benefits. Members who are yet to retire will be eligible to request a ‘surrender value’, which works in a similar way to a transfer value from the pension scheme. The terms of the surrender option will be set by the insurer and at this stage, it is not possible to be certain what these terms will be. The surrender value could be similar to the Trustee’s current cash equivalent transfer value basis, but equally they could be better or worse than the current basis.

A similar consideration applies to the Scheme’s early retirement and cash commutation factors which will be set by the insurer once the Scheme proceeds to buyout.