Pension buy-outs unaffected by financial crisis: Mercer

The current financial crisis seems not to have affected how pension related risks are handled, according to Mercer.

Trustees and pension scheme sponsors at a recent event hosted by Mercer said the crisis would not impact their plans to undergo a buy-out.

Of the 90 respondents 44% were planning to buy-out in the long-term, but three-quarters of them had not adjusted their expected timescale in light of recent falls in funding, and did not envisage doing so despite the economic crisis.

The majority of attendees (72 %) reported that they had still to address how best to manage their scheme’s financial and longevity risks.

Half of attendees reported that they had not taken any specific action so far to manage their key financial risk exposures.

Twenty-five percent of attendees said they were aiming to buy-out within the next three years.

According to David Ellis, principal at Mercer: ‘Buy-out is clearly still being actively considered. The thinking of the majority of trustee boards and sponsors seems unaffected by the recent market turmoil and they are aiming to buy out in line with their previous time horizons. Their expectation may be that financial markets will have recovered by the time they wish to go through the process.’