UK - An increasing number of employers and trustees are demanding specialist buyout advice as they consider the options for risk management of the scheme, Lane Clark & Peacock has reported.
The firm of actuaries and consultants said the large pension buyout deals reported at the end of 2007, such as P&O and Weir Group, are just the start of a growing trend and it predicted more "notable transactions" in 2008. (See earlier IPE story: Weir Group sells part of £550m fund to L&G)
Clive Wellsteed, partner at LCP, said: "We are not simply talking about schemes closing down and winding up - the trend is instead towards ongoing schemes and finance directors looking to see if a buyout contract makes sense as a pension scheme investment."
LCP revealed its clients closed over £300m (€403m) business in the last two months of 2007 as new entrants into the market, such as Lucida and MetLife, have intensified competition - making it "particularly attractive" for companies to buyout current pensioners as it often costs "less than 10% above the value of the accounting liabilities".
As a result, the firm claimed, the demand for specialist buyout advice is becoming similar to the need for trustees to obtain expert advice in a corporate mergers & acquisition (M&A) transaction.
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