UK - The Pensions Regulator has issued a financial support direction against six insolvent Lehman Brothers subsidiaries, ordering them to supply funds to the companies' UK pension scheme.

The six companies, which include the former European asset management division, are currently in administration, with PricewaterhouseCoopers in charge of proceedings.

At the time the bank collapsed in 2008, the Lehman Brothers pension scheme had a £100m (€126m) deficit.

Lehman Brothers' European Asset Management division, as well as the European bank, the UK holding company and three other named companies, now have 12 months to make the repayments.

In other news, the Confederation of British Industry (CBI) last week warned that the Pensions Regulator's advice should not get in the way of legitimate and well-advised activity in the market.

Speaking at the CBI's Pension Conference, deputy director-general John Cridland agreed there were some instances of poor practice, but called for a "more nuanced approach".

He said: "Some sweeping recent statements in this field - for instance, instructing trustees to assume that an Enhanced Transfer Value offer is not in members' interests - risk closing down a market completely."

Cridland also welcomed the coalition government's approach to reforms, saying the new ministers were pragmatists.

He said he expected discussions with the Department of Work and Pensions on issues such as the switch to CPI to resume in the autumn.

Also, figures released by Mercer have shown a rising demand in buy-out deals in the UK.

However, the consultancy noted that a great number of these deals were small, with almost two-thirds of all buy-outs resulting from premiums worth less than £10m.

Despite the trend toward smaller buy-outs, the volume of deals had reached £3.2bn in the first six months of the year, already approaching last year's total of £3.7bn.

Stuart Faloon, head of bulk annuity broking at Mercer, said: "If the trend of the first six months continues, total business volumes of approximately £6bn to £8bn may be anticipated."

Faloon added that this growth was being supported by some larger deals, with longevity swaps being examined as an option.

The consultancy said that if the government began issuing CPI-linked bonds in 2011 and that resulted in a liquid market, it would encourage a further increase in both buy-ins and buy-outs.

There has been increased interest in de-risking deals over the past six months, with both Hymans Robertson and LCP predicting significant growth in the market, marked by British Airways' £1.3bn deal with Rothesay Life in July.

Finally, KPMG has predicted further growth in the asset-backed funding market.

Mike Smedley, pensions partner at the company, said such deals met the demands of both trustees and sponsors at a time when the former wanted extra funding, while the latter were focused on healthy balance sheets and cash conservation.

Smedley said: "It's important to note these are not ‘magic bullets' suitable for all companies, all assets and all pension schemes.

"As their use grows, it will be crucial that both companies and trustees ensure they are implemented in a robust manner with careful consideration of valuation, taxation, accounting and legal issues."

Diageo recently agreed a funding proposal with its pension scheme that would see it invest £430m in maturing whisky, while supermarket chain Tesco last year offered £500m in property to its scheme as contingent assets.

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