UK – Former Prudential UK chief Mark Wood says his new Paternoster pensions buyout firm could generate “massive” economies of scale by aggregating mid-sized pension funds.
Paternoster this week unveiled £500m (€720m) in backing from a consortium including Deutsche Bank. The move was one of the first concrete developments in the nascent defined benefit pensions buyout market.
“We put them together and then the efficiencies of administration and asset management come to the benefit of the pensioners,” Wood told BBC radio today.
“We are most valuable to medium-sized companies and by putting a lot of medium-sized pension funds together clearly we can get massive economies of scale.”
He added: “You’d be surprised by the number of companies that have approached us for quotes - indeed we’ve been surprised by the number of calls we’ve had over the last few days.”
Wood told the interviewer that there was probably something like 250 such transactions last year – which was set to rise with the new Pensions Regulator and the Pension Protection Fund levy.
Companies were now “looking afresh” at whether it’s right to have a DB scheme on the balance sheet.
Wood said: “We’ll work with them on making an assessment about the life expectancy of people within the scheme and also the investment returns that can be achieved from their portfolio - and then agree with them a price for the transfer of all of the risk from their balance sheet to our balance sheet.”
No comments yet