The recent turmoil in the financial markets has once again underlined the fragile nature of pension fund finances. Buoyant equity markets and rising interest rates had pushed FTSE 100 pension schemes into a surplus of 15 bln stg at the end of last year. But the carnage in the equity markets last week wiped out more than 40 bln stg in pension scheme assets, equivalent to all the gains made in 2007. The volatility in pension scheme funding could result in companies looking to solve their pensions problems for good – one option could be opting to transfer pension schemes to a specialist buyout company. The growing number of entrants into this market has seen a significant reduction in buyout premiums – some estimate by as much as 10 pct. And although the buyout market has not taken off in the way that some commentators had predicted, 2008 could mark the turning point for the industry.

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