Crisis fails to dampen deal prices

PENSION transfer prices have held up despite the market volatility linked to the sovereign debt crisis, experts said yesterday.

America’s credit rating downgrade and the Eurozone sovereign debt crisis have had little impact on corporate bond yields, which drive the price costs of pension insurance buyouts and buy-ins – known as bulk annuities.

Pensions consultant Mercer said the situation today contrasted with that of 2008, when there was a perception of extra risk in the corporate bond sector. “At that time, this had made insurers nervous resulting in rising bulk annuity prices,”it said in a report.

Buyouts are used by companies to pass on pension 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.

In addition to ITV’s £1.7bn deal yesterday, specialist insurer Pensions Corporation also said it has completed an insurance buyout for the Nova Chemicals UK pension plan. The energy firm transferred £30m liabilities and 155 members.

The insurer said it was involved in auction processes for buyouts and buy-ins totaling around £9.5bn.