Rush to Offload DB Plans Hasn't Happened

September 21, 2007 ( - The predicted rush by U.K. companies to pay third parties to take pension schemes off their hands has failed to materialize, according to Aon Consulting.

A report from PA News said, according to Aon figures, during the past six months there had been little sign of increased volumes of companies looking to offload their schemes, and deals that had been made were on average relatively small. Aon said during the second quarter of the year 75 schemes were bought out, compared with an average of 84 per quarter during 2006.

“The figures from 2006 and the first half of 2007 show clearly that there has yet to be a discernible increase in business being placed, and even with the introduction of more flexible options, few pension schemes are at present seeing buyout as realistic and affordable,” said Paul Belok, principal & actuary at Aon Consulting, in the news report.

Anticipating large demand in the pension buy-out market, U.K. companies announced last year they had raised substantial capital to acquire pension schemes (See UK Firm to Buy DB Plans and UK Company Garners £400M to Take On Final Salary Plans ). Citigroup was the most recent to do this, with its takeover of the pension scheme of the U.K.’s Thompson Regional Newspapers, which includes 2,800 retired and 800 deferred members (See Citi Buys DB Plan of UK Newspaper Publisher ).

Industry professionals at PLANSPONSOR’s 2006 DB Summit predicted the emergence of a new entity that would take on administration and sponsorship of DB plans would also occur in the U.S. (See Is Sponsorship Transfer Next Frozen DB Plan Solution?).