The proportion of U.K. defined benefit pension funds that identify a buyout as their long-term objective increased to 27%, from 20% two years ago, a new survey by Aon Hewitt found.
In its Global Pensions Risk Survey 2015, Aon Hewitt also found that for 65% of pension funds surveyed, their long-term objective was self-sufficiency or having a low risk position — both in terms of the overall funding target, and the investment risk that they expect to run. Six percent had no long-term objective. Answers from the remaining 2% were classified as “other,” which a spokeswoman for Aon Hewitt said most often related to technical provisions.
The 2013 survey found 20% of pension funds looking to ultimately do a buyout, 64% looking for self-sufficiency or low risk, and 9% having no objective, with 7% “other.”
Within the recent responses, Aon Hewitt found smaller pension funds were more likely to view a buyout as their ultimate objective than larger pension funds. Of those with less than £100 million ($155 million) of assets, 49% of pension funds said a buyout was their ultimate goal, vs. 31% of pension funds with between £100 million and £1 billion, and 8% of those with more than £1 billion.