The buyout market aimed at U.K. corporate pension plans remains stagnant, according to a survey by Aon Consulting. There were 75 transactions in the second quarter and 50 in the first quarter, compared with a quarterly average of 84 for 2006. The average value per transaction also remained low at £4.6 million ($9.23 million) for the second quarter of 2007 and £6.2 million for the first quarter. In 2006, the average value per transaction was about £4 million.
Barriers to implementing pension liability buyouts include high costs and a labor-intensive process often extending over months if not years, Paul Belok, principal at Aon Consulting, said in a news release about the survey. “Despite the hype around the buyout market and its expected growth, the market is still to prove itself,” he added.
However, the number of quotes obtained by pension plan officials — an indication of anticipated future growth — increased to 290 in the second quarter and 262 in the first. In 2006, the quarterly average was 193. Part of the increase may be due to a bigger pool of pension liability buyout providers, Mr. Belok said.
