Arrange buyouts to avoid risks

Operations director Margaret Snowdon told delegates pension buyout is currently a buyers’ market with low prices, however costs are likely to rise in the future.

Snowdon said: “The buyout market is developing rapidly and some really exciting and different solutions to pension legacy problems are emerging.

“It is important trustees and sponsors keep abreast of these developments and ensure they are able to make informed choices that are best for their scheme. Talking to buyout companies is probably the best way to do this.”

Snowdon added it was important to understand the cost of running schemes and explained how holistic liability management could potentially add value.

She said: “It is essential scheme managers understand the risks they face and ensure they structure a deal to avoid collateral risks like reputation and data.”

Snowdon said trustees should choose buyout companies very carefully.

She said trustees should look for long-term capital backing, risk appetite, strong asset management and expertise from a buyout firm.