Pension transfers stay steady

PENSION transfer prices remain stable despite volatility in wider financial markets following the sovereign debt crisis, said benefits consultant Mercer, as two pension insurance deals closed yesterday totalling £1.73bn.

The US credit rating downgrade from Standard & Poor’s and the ongoing euro zone sovereign debt crisis has had little impact on bond yields, which drive the price costs of pension insurance buyouts and buy-ins – known as bulk annuities.

“Unlike in 2008, there is no perceived extra risk in the corporate bond sector,” said Mercer. “At that time, this had made insurers nervous resulting in rising bulk annuity prices.”

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Buyouts are used by companies to pass on pension assets and liabilities, which as retired workers live longer can in extreme cases threaten an employer with insolvency. Buy-ins are generally used to insure a scheme’s liabilities but leave most of the assets within the scheme.

Specialist insurer Pensions Corporation said it has completed an insurance buyout deal for the Nova Chemicals UK Pension Plan.

The energy company has transferred £30m of liabilities and 155 members in a pension buyout deal, Pension Corp said.

Meanwhile, Credit Suisse has taken on £1.7bn of risk posed by people living longer than expected from ITV’s UK pension scheme.