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March 06, 2006
Pension Schemes Role Could Beckon Hedge Funds
In a potentially industry altering discussion, the possibility of allowing Investment banks, asset managers and hedge funds to take over pension schemes of financially strapped companies under plans are being discussed. The discussion is driven by the Pensions Regulator and the City watchdog. It is being reported that this move will offer hope to pensioners of failing companies in form of a higher retirement income than that guaranteed by the Pension Protection Fund, the government-sponsored safety net. This move will also have a positive impact on companies, particularly in traditional industries where the core business has shrunk and pension liabilities have mounted. Ft reports:
Investment banks have been clamoring for the right to acquire the assets and liabilities of closed pension schemes at competitive prices, arguing they could make a profit. Other investors are understood to be seeking a role. These include Mark Wood, the former head of Prudential’s UK life assurance business. The Pensions Regulator was initially worried that such deals posed grave risks to scheme members. But it has now begun exploratory talks with potential investors and the FSA.
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