A wave of pension buyouts during the next five years is predicted – 11 per cent of employers are considering a sale in the next five years and 16 per cent over a longer period – with ridding their balance sheets of risky pension liabilities being cited as the companies’ primary motivation for thinking about entering talks with potential buyers.

Other reasons include the current volatility in the credit market, and escaping the increasing costs and regulations which expensive schemes entail; most have already closed expensive plans to new entrants, and a small number has cancelled them for existing employees.

Marc Hommel, a partner at PwC, said: “We are seeing a surge of interest from employers of all shapes and sizes looking to rid their balance sheets of pension liabilities. This is being driven by a feeling of loss of control over pension scheme financing fuelled by recent investment market volatility and, in some cases, overly prudent scheme funding demands from trustees.”

Approximately 20 new companies have sprung up in the last two to three years, specifically for the purpose of buying pension scheme liabilities in order to run them for profit, so there is a lot of room to get out of pensions for those companies that wish to do so. Most will not be getting out of pensions completely, the survey found, but will be changing the way that they provide them.

Unions are concerned by the results, as they believe the new arrangement could deter new staff and that it could lead to major cuts in retirement payouts.

Get Pension advice

© Fair Investment Company Ltd