UK - Concerns continue over pension liabilities

Despite the liability issues caused by longevity, the majority of firms suggested that current pricing of pension funds is excessive and would prevent any potential buyout of a pension scheme. Only 25% of respondents stated that they would be prepared to pay 120% or more of the FRS 17/IAS 19 measure, while current average pricing is 130-150%. Pensions funds were also widely regarded as an obstacle to private equity transactions. Agreeing a settlement with the trustees of a pension scheme was seen as the most difficult step in any deal, above even obtaining clearance from the pension regulator regarded as less problematic.

The report - The Market Value of Pensions Liabilities - gathered the views of 16 private equity firms in the UK in early 2008 in order to find out how the UK private equity market prices defined benefit pension liabilities, and the significance of pension schemes in investment and divestment decisions. The survey was conducted by actuarial and pension administration consultancy Punter Southall Transaction Services.

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