Elephantstrunk

Goldman moves in on pensions

More interesting, not least because it is more visible is the Oliver Hemsley/Mark Wood vehicle Paternoster described here. Such moves are clearly of a piece with suggestions of a market in pension obligations. I don’t understand how this is supposed to work. If companies want to eliminate pension liability risk they can. The problem is that it is expensive to do. Effectively the pension fund provides cheap off-balance sheet junior debt and a lottery ticket and it would be a brave finance director that didn’t exploit it. See for example Accounting for Growth. Actuaries and trustees won’t tell them to fund the schemes better. I can only think they aim to assist in buyouts of various sorts. Being able to fix the pension liability could be very useful.