UK - Lower prices and better income security for scheme members have increased the popularity of occupational pension fund buyouts over the past twelve months, according to Watson Wyatt.
Steven Dicker, senior consultant, Watson Wyatt, commented: "Not long ago, the cost of removing pensions risk from the corporate balance sheet was seen as prohibitive.
"Competition and more attractive pricing may now have brought buyout within reach of more companies."
Mark Wood, chief executive of buyout company, Paternoster, spoke at the Watson Wyatt hosted conference which ran the survey.
Wood told Global Pensions Paternoster would issue some 27 quotations worth around £11.5bn (US$22.8bn) this week alone.
He added the company expected to complete pension fund liability buyouts worth £2.5bn in the first quarter of 2008.
The Watson Wyatt survey showed companies were prepared to pay between 110-120% of their pension fund liabilities to remove them from balance sheets.
Around a year ago, the average buyout price was estimated around 130%.
Wood commented on the effect of FRS17 on pricing: "If companies heed the Pension Regulator and ASB's recommendations regarding this measure and their FRS17 assessments improve, we could see companies with higher valuations than buyout price quotations.
"This would mean these companies would not have to pay more to remove their pension fund's liabilities."
Three quarters of respondents said the level of security for members was the most important issue when discussing the possibility of a buyout, if price was not an issue.
Last week, Paternoster announced it had taken responsibility for the Morrison Bowmore Distillers in phased buyout of its pension scheme worth around £30m (€38m).
Watson Wyatt's figures showed £3.5bn of defined benefit (DB) pension liabilities were transacted in 2007, which accounted for less than 0.5% of the whole DB universe.
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