A wave of Britain's largest firms are planning to offload huge pension liabilities to a key market player.
The Pension Insurance Corporation (PIC), a company that specialises in taking pension headaches away from businesses, will today launch a £250m investment bond to fund a bottleneck of deals in late 2016 and early 2017.
Sources close to the company told City A.M. that the additional cash would enable PIC to set aside sufficient regulatory capital to fund a raft of scheme buy-outs and buy-ins.
It has been a comparatively quiet year for both PIC and the buy-out sector. But the lower for longer interest environment has provided additional impetus for firms to shift risk from their balance sheets.
Buy-outs, the most recent of which was on Monday as L&G purchased one of Rolls-Royce's schemes, are where companies pay a specialist insurer to take on the defined benefit liabilities.
Scheme buy-ins are where the insurer buys only part of a pension scheme's liabilities, they are often seen as a stepping stone towards the wholesale lifting out of a scheme that a buy-out provides.
Sources said today that a number of companies are queuing up at PIC's door to shed liabilities after Sky News tweeted about the plans overnight.
Each time a transaction is completed, while the company pays the insurer to take the scheme away, the insurer must set aside an additional amount of regulatory capital. The proceeds from PIC's corporate bond would help provide liquidity to cover the increased demand.