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Telegraph opts for bulk buyout as prices begin to rise

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  • Telegraph opts for bulk buyout as prices begin to rise

UK - The Telegraph Media Group, publisher of UK broadsheet the Telegraph, has tapped Legal & General to buy out £12m of its defined benefit staff pension plan liabilities.

Lane Clark & Peacock (LCP), which advised the Telegraph's trustees on the buyout of the scheme's benefits, said the publisher wanted to secure members' "historic" define benefits in full without disrupting the ongoing defined contribution scheme.

According to LCP, the Telegraph was still able to "take advantage of current competitive pricing in the buyout market".

This news comes as pension buyout company Paternoster says the period of ever decreasing buyout prices has come to an end, as rising inflation pushed up the overall cost of pension buyouts in the second quarter of this year.

At the end of June, the company's buyout index found schemes invested in gilts and AA-rated corporate bonds saw a 4% increase in the cost of a buyout over the 90-day period.

Schemes invested in equities substantially also saw the cost of a buyout rise by 7% during the quarter to June 30.

Mark Wood, chief executive of Patnernoster, said the increase in the overall cost of buyouts since the end of March was particularly true for schemes with significant equity exposure.

"Schemes which de-risked into gilts and high quality corporate  bonds have fared best," he said.

The majority of the schemes currently seeking quotations have de-risked their portfolios, thereby immunising themselves from the fall in equity values, concluded Wood.

That said, the company claimed the combination of a 10% reduction in pensioner buyout costs and a 7% increase in the value of gilt and bond assets has led to pensioner buyouts being 15% more affordable at June 30 than they were at December 31, 2006.

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 carolyn.bandel@ipe.com

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