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Some 11 per cent of employers are considering a sale in the next five years and 16 per cent over a longer period.

Speculation that the market is about to see a period of energetic trading of pension schemes is backed up by the fact that around twenty new companies have been set up in the last two to three years to buy pension scheme liabilities and run them for profit.

Marc Hommel, partner, PricewaterhouseCoopers LLP, said that his firm had seen a surge of interest from employers of all shapes and sizes looking to rid their balance sheets of pension liabilities. He believes that this is being driven by a feeling of loss of control over pension scheme financing fuelled by recent investment market volatility and, in some cases, overly prudent scheme funding demands from trustees.

Trapped surpluses 

"Attractive as the prospect may be to some, selling a pension scheme is not always in the best interests of the employer and pension scheme members. There are many options open to employers that want to reduce the pension risk to their businesses including keeping the pension scheme and managing it differently. The optimal solution will be unique to each company."

The survey of 193 companies (including 45 FTSE100 organisations) also reveals that 53 per cent of larger companies (and 31 per cent of smaller ones) are concerned about the prospect of trapped surpluses - excess money caught within the scheme that cannot be recovered by the employer thus reducing the company’s effective use of capital.

To address this concern, there is growing interest in the use of contingent assets (such as PricewaterhouseCoopers' ‘reservoir’ funding approach) to meet trustees’ needs for security while allowing the employer to retain control.

Wealth management 

Employers are not intending to get out of the pensions game altogether, but rather to change the way they provide pensions. Indeed, 90 per cent of employers say the importance of pension provision as part of the employment deal has increased or stayed the same.

Some 56 per cent say they are looking at future pension policy in the context of overall wealth management for their employees while 61 per cent claim to be taking into account that people at different stages of their lives value employer pension provision differently. For example, a younger person may wish to save less into a pension in favour of buying a property.

In addition, 15 per cent of employers (24 per cent in the case of larger employers) are considering setting up a corporate group self-invested pension plan, in part to enable employees to roll over tax on company shares effectively.

Imagination

Marc Hommel, partner, PricewaterhouseCoopers LLP, said: "Many companies are considering radical change to their pension provision to fit in with their business strategies and changing demands from their workforces but few have actually implemented anything yet. We expect to see greater imagination in pension provision in future, with companies introducing new arrangements that give them much better value for the considerable amounts they are spending."

Further improvement for funding positions look likely with 47 per cent of respondents saying they expect to make one-off special deficit payments in the next 12 months. Some 46 per cent expect to pay regular increased cash contributions over the next three years.

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