UK - Only up to 10% of UK companies are candidates for a buyout solution for their pension scheme within the next three years, according to a survey from Aon Consulting.

The findings could be a surprise for the companies that have been created over the last year to provide buyout solutions for companies which are burdened with expensive pension funds.

"Amongst those schemes that are considering it, the average time to buyout is likely to be more than 12 years," Aon stated.

With bond yields slowly coming back from the grave liabilities of pension funds are growing more slowly and indeed many larger schemes considering buyout could even take more than 20 years to buyout.

Two thirds of all schemes surveyed are not interested in a buyout at the moment at all.

Another factor which hems the surge in buyouts is the costs. Only 10% of schemes considering buyout would be prepared to pay more than 120% of the FRS17-calculated liabilities, the study found. But buyout costs usually amount to 130% and more.

"Many employers will prefer to wait for more flexible or attractive alternatives to emerge, and for the price of settlement to become more manageable in terms of the balance sheet impact," Paul Belok, head of closed schemes at Aon Consulting, commented.

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