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UK roundup: Hymans Robertson, Pitmans Trustees, Merseyside, Aon Hewitt, Mercer

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  • UK roundup: Hymans Robertson, Pitmans Trustees, Merseyside, Aon Hewitt, Mercer

UK - Nearly 40% of risk transfer deals in the past year were conducted during the second quarter, with Hymans Robertson hailing the return of a "buoyant" market as new providers launched.

Noting there had been a 400% increase in deals compared with the first three months of 2011, the consultancy seemed optimistic for the overall state of the risk transfer market, as it said further deals were already in the pipeline for later in the year.

By volume, Legal & General once again outperformed all rivals, conducting 24 deals in the three months to 30 June.

However, its total sum of de-risked assets was dwarfed by the single-biggest deal, with Prudential agreeing to a £280m (€311m) transfer.

Overall, the second quarter has seen £1.4bn of risk transferred, accounting for 39% of all deals struck in the past 12 months. 

Patrick Bloomfield, partner and head of trustee solutions at Hymans Robertson, said that, given growing demand, it was not surprising Nomura and Friends Life had entered the market in the first quarter.

"The second quarter saw a buoyant return to activity in the pension risk transfer market after a quieter start to the year," he said.

"The level of activity highlights how several schemes have taken the opportunity to de-risk at what appears to have been an opportune time to do so. Market conditions were favourable throughout the quarter, but have turned dramatically in August's market turmoil."

However, despite the amount of activity during the second quarter, the consultancy noted that no longevity swaps occurred over the period, with only one deal worth £100m conducted in the first six months of 2011.

In other news, Pitmans Trustees (PTL) has criticised the lack of governance structures within contract-based defined contribution (DC) schemes, arguing the current level was "deplorable".

Richard Butcher, managing director, said governance with these arrangements was "frequently lacking".

"There is a gaping chasm between the governance provisions in contract-based arrangements and those in trust-based, and this needs to be closed very quickly if we are to ensure good outcomes for members in retirement," he said.

"No one has the ultimate legal responsibility for governance, which means, often, that there is no governance. Certainly, governance committees can help things, but ultimately, they are toothless."

He instead called for the government and industry to outline a statutory framework that would improve standards and member outcomes.

Finally, the £4.7bn Merseyside Pension Fund has replaced Mercer with Aon Hewitt as its investment consultant.

The contract, first tendered at the beginning of the year, will see the consultancy monitor and review investment managers for three years, with a potential three-year extension possible.

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