LONDON — The pension plans of FTSE 100 companies, in aggregate, are in the black for the first time in nearly six years, but they may face new challenges when dealing with a surplus, according to an actuarial study by Deloitte. Pension deficits have fallen by £40 billion ($79 billion) since Dec. 31 and are at their lowest level since 2001; Deloitte had reported a £21 billion deficit for the U.K.’s top 100 companies as of March 30. The improvement is largely due to strong U.K. equity returns. And now, the U.K.’s top companies will now have to “manage the risk that surplus becomes ‘stranded’ in the scheme, as it is near impossible for the employer to take a refund from a pension scheme,” according to the report.
“Some companies are taking a one-way bet with their pension schemes. If the equity market falls, the company needs to pay in more to plug the loss, but if equities rise further, the company may not be able to benefit from a surplus,” David Robbins, a pensions partner at Deloitte, said in the report.
Venture targets U.K. pension fund buyouts
LONDON — UBS Global Asset Management and AEGON introduced a joint venture called UBS AEGON Affordable Risk Transfer Solution. The pension fund buyout business, which targets funds with liabilities in excess of £300 million ($590 million), combines asset management, risk management, administration and insurance capabilities to provide tailored programs that allow clients to shift pension liabilities in tranches, according to a news release. “This increases the probability of lower overall costs and makes risk transfer more affordable for partially funded plans,” according to the release. UBS is in discussion with a number of clients. UBS spokeswoman Sarah Small said no additional information was available.
Watson Wyatt to acquire German consultant
LONDON — Watson Wyatt Worldwide plans to acquire German consulting firm Heissmann, according to Watson Wyatt spokesman Ed Emerman. Watson Wyatt plans to acquire 100% of the firm, including its subsidiaries in Ireland, the Netherlands, France and Austria. The companies are aiming to sign a definitive acquisition agreement by the beginning of July, subject to regulatory approval. Terms of the deal were not disclosed.
Heissmann spokeswoman Ulrike Lerchner-Arnold confirmed the deal but was not able to provide further details at press time.
BlackRock creates fund for U.K. investors
NEW YORK — BlackRock introduced a bond fund for retail investors in the U.K., the first time the firm’s fixed-income capabilities will be marketed to individual investors in the region, confirmed spokeswoman Emma Phillips. The mutual fund, called Merrill Lynch International Investment Funds Fixed Income Global Opportunities Fund, will be distributed through the Merrill Lynch Investment Manager’s European funds business. It will be managed by Keith Anderson and Scott Amero, BlackRock managing directors and co-heads of fixed income.
