Home » Human Resources Articles » Pensions Buy-In bonanza over, Longevity Hedging the future for pensions de-risking claims law firm
Pensions Buy-In bonanza over, Longevity Hedging the future for pensions de-risking claims law firm
As businesses grapple with increased mortality risk on pensions, longevity hedging is set to gain in popularity over the more expensive option of buy-ins.
LONDON, UK, September 26, 2009 /Human Resources PR News/ -- The pensions buy-in bonanza is over and longevity hedging the way forward according to law firm Pinsent Masons LLP.
That's the view formed following a seminar held this week, at which delegates indicated their preference for longevity hedges. Sixty-eight percent of the audience, made up of senior figures from the pensions industry, agreed that longevity hedging would become more popular than buy-ins over the next twelve months as pension schemes sought to secure certainty on future mortality risk.
But there was no clear preference over the structure of a longevity hedge (given the choice of an insured product or a capital-markets product), as long as the price was right, with 65% saying price was more important.
Head of pensions Christopher Berkeley said, "With difficult economic conditions continuing to cause headaches for both businesses and pension scheme trustees, some form of control over pension liabilities is required by all parties. This week it's been reported that pension shortfalls at FTSE250 businesses have doubled to GBP12bn and, with life expectancy continuing to rise, many schemes will be seeking to secure their future one way or another. Market volatility and the changed economic conditions over the last 12 months have meant buy-ins are not as tempting to schemes as they once were. Longevity hedges do not necessitate a cash payment up-front from a business and are thus gaining popularity; we are expecting the market to increase significantly and we understand there are a number of deals in the pipeline following on from the Babcock and RSA deals."
Pinsent Masons is predicting longevity swaps will gain popularity with manufacturing businesses due to the high number of pension schemes with large deficits in the sector. The firm advised the trustees of one of Babcock International Group PLC's pension schemes (the Devonport Royal Dockyard Pension Scheme) on the first ever longevity swap with a UK pension scheme earlier this year and it is currently working on two further swaps for the group, which should be concluded shortly.
About Pinsent Masons
Pinsent Masons is an established, full service law firm with truly international reach, a reputation for delivering both world class service quality and excellent value, providing a full range of corporate, financial and commercial legal services to major UK and international corporations, institutions and public bodies. The firm ranks amongst the top 100 global law firms and has well over 1,000 partners and other lawyers worldwide.
Pinsent Masons office network includes the major international business and financial centres of London, Dubai, Beijing, Shanghai, Hong Kong and Singapore and the key business centres in the UK: Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester.
The firm also has a strategic alliance with Salans, a leading international law firm with over 750 lawyers across 21 or more locations in Western and Eastern Europe, Asia and the United States.
Pinsent Masons LLP is a limited liability partnership registered in England & Wales (registered number: OC333653) and regulated by the Solicitors Regulation Authority. The word 'partner', used in relation to the LLP, refers to a member of the LLP or an employee or consultant of the LLP or any affiliated firm who is a lawyer with equivalent standing and qualifications. A list of the members of the LLP, and of those non-members who are designated as partners, is displayed at the LLP's registered office: CityPoint, One Ropemaker Street, London EC2Y 9AH, United Kingdom.
We use 'Pinsent Masons to refer to Pinsent Masons LLP and affiliated entities that practice under the name 'Pinsent Masons or a name that incorporates those words. Reference to 'Pinsent Masons is to Pinsent Masons LLP and/or one or more of those affiliated entities as the context requires. For important regulatory information please visit: http://www.pinsentmasons.com/
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Press Release Contact Information:
Richard Treadwell
Pinsent Masons
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London, UK
UK EC1R 0ER
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