UK - Pension fund buyout firms must win some business soon or risk imploding, according to a senior figure at the newly launched Occupational Pension Trust (OPT).
Ben Shaw, development director, OPT, told Global Pensions some of the new players in the market had aggressive business winning tactics, but were not yet making enough money to keep afloat.
Shaw said: “Some of these new buyout firms are expensive to run and are currently well financed by a sponsoring company; however, some have taken on deals which haven’t made them any money and others haven’t got a single transaction yet.”
He added: “It won’t happen this year, but I can see a big fallout in the near future if deals are not carried out quickly.”
Shaw commented that pension funds’ reluctance to enter this market could be down to them seeing the pension fund buyout option as too expensive.
He clarified that the OPT offered a cheaper solution, with the cost of taking a company’s pension liabilities as around half that of the major firms in the buyout space.
OPT has been created as a national pension scheme confederation with member funds continuing to run under their existing arrangements, but overseen by the organisation’s independent trustees.
Schemes which join the body would be bolstered by a cash injection from the original sponsoring company to boost funding levels.
Shaw concluded that there had been a good take up on the organisation: “Around 90% of companies we have spoken have shown interest in working with us.”
He confirmed OPT had looked into taking on Telent’s pension fund which has instead been bought out by Edmund Truell's Pension Corporation, but said the deal was not suitable.
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