The Financial Services Authority (FSA) has today authorised Paternoster as a life assurance company.
The company backed by Deutsche Bank and Eton Park International LLP and created by the former chief executive of Prudential, Mark Wood, in April plans to offer tailored solutions to the £1,000bn defined benefit (DB) pension marketplace.
Paternoster will offer to buy the DB pension liabilities of UK companies and pension scheme trustees to free companies and trustees from the increasing risks of longevity, as well as investment risks in their pension funds.
It claims additional pressure on companies to manage deficits is being driven by the increased powers of the Pensions Regulator, and the introduction of the Pension Protection Fund.
As a result Paternoster believes there is growing demand for UK companies to remove DB pension obligations from their balance sheets, particularly as businesses are under increased pressure to disclose pension fund obligations in company accounts.
Wood says the FSA process has been extremely thorough and effective adding: "Demand for final salary pension transfers is growing at a pace. We expect very few businesses to continue to have a defined benefit pension scheme on their balance sheets within the next five years. Even with the growing number of new entrants there may not be sufficient capital within the authorised insurance companies to satisfy demand."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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