Technical update home | June 2008
Reducing risk by buying-out liabilities
A recent survey by Lane Clark & Peacock (LPC) has suggested that around 10% of FTSE 100 companies are thinking of buying-out some or all of their scheme liabilities. If this were to be the case, the buy-out market would exceed £10bn in 2008
- a fourfold increase on 2007. Whilst the largest buy-out transaction to date has been the £800m deal to insure current pensioners in the P&O pension scheme, LCP commented that insurance firms had issued seven quotations for potential transactions over £1bn.
- Buy-outs are set to dominate the pensions arena – for both employers and trustees
- for the foreseeable future.
This article looks at the risks and approaches associated with buying-out liabilities from three separate perspectives: