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The Actuary The magazine of the Institute & Faculty of Actuaries

First FTSE 100 firm to de-risk pension scheme

Paternoster has won the tender to secure member benefits under the defined benefit pension scheme of Lonmin. It will be the first company in the FTSE 100 to de-risk its pension liabilities by ceding risks to an insurance group.

Paternoster also recently launched a ‘buyout affordability index’, which helps to monitor the effect of market movements on the cost of a buyout. Early figures show that widening credit spreads in the first quarter of 2008 reduced the cost of funding a buyout. However, improved perceptions of future market liquidity and the resultant narrowing of credit spreads increased the cost of the buyout option in April by 3%.