Monday, December 17, 2007

Pension Problems

"Paternoster, the privately-owned pensions group, is taking on the defined-benefit pension scheme of Lasmo, the UK oil exporter owned by Italy's ENI, after winning the largest-ever electronic auction for a pensions buy-out. The auction is thought to have been hosted by Mercer, the pensions consultants, during October. Bidders competed to charge Lasmo the lowest fee for assuming its pension scheme liabilities and supporting asset portfolio", Chris Hughes at, 9 December.

The "lowest fee". Interesting. Whose actuarial assumptions went into the fee estimate? Will Paternoster remain solvent to discharge Lasmo's pension liabilties? Or is the transaction a form of long-term "fraudulent transfer" to enable Lasmo to escape the liabilities? If I recollect properly, General Motors (GM) tried something similar when Delphi was created. See my 7 October post about GM's VEBA.

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