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The Actuary The magazine of the Institute & Faculty of Actuaries

Pension scheme buyouts on the rise

HSBC Actuaries and Consultants has announced that it advised Rank Group in the recently confirmed Rank pension plan deal with Goldman Sachs’ Rothesay Life, involving approximately £700m of assets and 19,000 members. Simon Taylor, who heads up HSBC Actuaries’ London team, said: “This was a ground-breaking approach. We believe that this is one of the biggest transactions of its type in the UK, and our role has provided us with considerable experience that we look forward to applying again in future cases. We are already talking to a number of other organisations looking to benefit from our fresh and innovative approach to these issues.”

Paternoster, the regulated insurance company that takes responsibility for the risks associated with companies’ defined-benefit pension schemes, has announced that Chrysalis Group, the independent music company, has selected Paternoster to secure members’ pension benefits in relation to its group retirement benefits scheme. The total assets now secured by Paternoster are in excess of £1.6bn. The scheme’s members have already been notified by the trustees. Barnett Waddingham advised the trustees in this case.

Strong end to 2007
In Aon Consulting’s latest quarterly buyout market survey, it shows that over the fourth quarter of 2007 there was a dramatic increase in the value of cases being placed, mostly due to large deals including Emap, P&O, Lasmo and Weir Group. While the number of cases placed (75) was similar to that in previous quarters, the total value of business placed (£1.86bn) was more than twice that placed in the previous three quarters put together, as illustrated in the graph below.
The average value per scheme placed was up significantly from around £5m per case to almost £25m. There were also some signs of a slightly higher take-up of ‘non-standard’ buyouts (such as partial or phased buyouts, or on a risk-share basis), with eight of the 75 cases being something other than full buyout.