UK - Pensions buyout business in 2009 will match 2008 levels of around £8bn (US$11.3bn) in 2009, Lane Clark & Peacock (LCP) research reveals.
It said, while buyout prices remained above the historically low levels seen in the first half of 2008, a typical scheme could expect to complete a buy-in of their current pensioners at broadly the same cost as the amount of the funding reserve agreed between companies and trustees in their actuarial funding valuations.
Despite this, it said depressed equity markets were having an effect on deal flow - and noted activity in the buyout market was dominated by pensioner-only transactions.
LCP partner Clive Wellsteed said: "With most businesses suffering as the recession takes hold, risk can be reduced on the corporate balance sheet without tying up valuable cash.
"For the trustees of pension schemes, transferring risk to an insurance company is often a welcome trade-off against a deteriorating employer covenant and likely to be on the agenda for many pension schemes in 2009."
The report also pointed out the increased interest in longevity swaps, potentially offering an alternative to buy-in for schemes looking to reduce exposure to the risks of improving life expectancy while retaining direct control of their assets.
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