UK Pension funds to offload assets in coming weeks

Britain’s company pension schemes, grappling with ageing former employees and low investment returns, may start to transfer their assets into new so-called superfunds in the coming weeks, according to people involved in the process.

UK Pension funds to offload assets in coming weeks

Britain’s company pension schemes, grappling with ageing former employees and low investment returns, may start to transfer their assets into new so-called superfunds in the coming weeks, according to people involved in the process.

There are around £2 trillion (€2.3trn) in more than 5,000 UK private defined benefit or final salary pension schemes. Nearly two-thirds are in deficit, putting a burden on companies looking to strike merger deals or restructure debt.

Although most companies have closed these generous pension schemes to new members, they still need to pay them to long-serving or former employees. Firms with large pension deficits include former UK nationalised industries such as British Airways and BAE Systems.

The problem is Europe-wide, as people live longer and years of central bank quantitative easing have depressed interest rates, leading to gaps between the fixed sums the pension schemes pay out and the income they receive from their investments. But through superfunds, Britain has come up with a new way for companies to get those pensions off their books.

The superfunds are designed to consolidate billions of pounds in collective assets from various company schemes, aiming to benefit from economies of scale and manage the money more efficiently.

The first deals will be small, but the superfunds are aiming to manage billions of pounds in assets.

The Pension SuperFund, founded by industry veteran Edi Truell, and Clara Pensions, whose chief executive is former hedge fund manager Adam Saron, both have deals under review by the UK Pensions Regulator, said the firms, without naming the company schemes.

The Pension SuperFund told Reuters it expected a £10m “seed” deal to launch in the next few weeks. “The first deal is absolutely tiny, it ticks all of the boxes,” said Mr Truell. “Everybody is trying to make sure we set the right precedent.”

He added that the superfund had drawn interest from pension schemes collectively managing £60bn.

Clara Pensions said it had conversations with more than 60 pension schemes totalling £15bn in liabilities and it would be “very happy” if its first deal launched in the third quarter. The deal would total less than £100m, said Mr Saron. The UK Pensions Regulator declined to comment on the proposed deals.

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited