Pension scheme buy-outs set to double

The number of pension schemes run by buy-out specialists is expected to double in the next four months.

Experts at HSBC Actuaries and Consultants predict there will be a large jump in UK pension members’ schemes being passed over by employers to insurers, from 80,000 currently to more than 180,000 by the end of the year.

And by the end of 2009, the number of plans changing hands is expected to rise to one million.

Jonathan Sarkar, HSBC’s head of corporate consulting, said: “The increase in insurers’ appetites to take on longevity and sponsor risk means that there is now a wide range of solutions available to employers wishing to transfer liabilities away from a final salary pension scheme.”

Sarkar predicts the buyout market for UK defined benefit schemes will grow to around £12bn this year. This reflects strong growth in recent years as employers and pension trustees have looked for ways to pass on the responsibility of pensions.

Among the larger deals, ferries operator P&O, casino group Rank and miner Lonmin have struck agreements to offload risks related to pension schemes.

Earlier this month, separate research found more than £50bn had been wiped from FTSE100 pensions in the past 12 months.

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