FTFM UK pension schemes, so long the staple of employee benefits, are increasingly being seen as the monkey on the sponsoring employers’ backs. But despite a buoyant and fiercely competitive buy-out market, that option is still too expensive for most schemes. With premiums generally 10-30 per cent higher than the IAS 19/FRS 17 accounting reserve, new options are springing up to offer a buy-out alternative.
One such innovation – dubbed “beneficial abandonment” – picked up real pace in the UK midway through 2007. Within months of each other, Pension Corporation (PC), a specialist insurer, bought Thorn and Threshers and investment bank Citi snapped up Thomson Regional Newspapers’ (TRN’s) pension scheme; both were non-insured buy-outs.
