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DB schemes continue feeding buyout market

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  • DB schemes continue feeding buyout market

UK - Almost half of UK private sector defined benefit (DB) pension schemes expect to offload their liabilities through a pension buyout or other type of transaction within the next 10 years, according to consultancy Watson Wyatt.

In its Pension Plan Design Survey 2008, the consultancy finds that companies are focused on the need to manage the cost and risk of their final-salary pension plans.

More than 40% of these schemes are expected to have closed to future accrual within the next five to 10 years. Watson Wyatt contrasts this figure to the 6% of schemes who are currently looking at such measures.

Only 14% of final salary pension schemes are likely to remain open to new entrants over the next 10 years, down from the current 25%, while defined contribution plans will become increasingly important.

In a general retreat from DB provision, Watson Wyatt estimates that contribution rates to DC plans will be higher over the next five to 10 years than they are now.

The news comes as UK pension buyout specialist Paternoster announces its business has grown 550% in the last 12 months.

Mark Wood, chief executive of Paternoster, said in a statement earlier this week: "Our new business pipeline continues to grow and we anticipate up to as much as £5bn (€6.3bn) of active quotations could transact in the remainder of the year, bringing the full year to £10-12 billion."

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email

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