Aegon and UBS Global Asset Management are joining forces to create a bulk annuity company that will look to buy out the pension schemes of blue-chip companies.
The UBS Aegon Affordable Risk Transfer Solution will aim for companies with pension fund liabilities in excess of £300m.
Aegon, like several other companies, has already launched a bulk annuity buyout service into the smaller end of the market but there is less competition for the schemes of FTSE 100 stocks.
However, demand for the service is expected to be strong as it could remove the barriers to a lot of potential takeover deals by private equity firms that have balked at the prospect of taking on the pension liabilities of big employers, such as British Airways and Unilever.
The two groups will combine their insurance, administration, asset management and risk management capabilities to bring economies of scale and reduce costs.
Aegon chief executive Otto Thoresen says: “Linking with UBS Global Asset Management will enable us to provide a bespoke bulk annuity service to a different segment of the corporate market from the small to medium enterprise market where we have made a strong start.”
UBS Global Asset Management head of global investment solutions Brian Singer says the two companies together can provide customised solutions to their clients’ needs.
Singer says: “This initiative brings longevity risk management into the toolkit of the asset manager and perfectly complements our dynamically managed investment solutions for pension plans.”