Trustees and scheme sponsors have dramatically different views on the evermore relevant issue of de-risking pension funds, says MetLife Assurance Limited.

New research from the company shows a disquieting difference in attitude to risk transfer in the downturn, with only ten per cent of finance directors of defined benefit (DB) pension schemes considering a buy-out or buy-in over the next two years, compared to 51 per cent of trustees.

Dan DeKeizer, chief executive at MetLife, commented: "There appears to be a significant difference of opinion between company finance directors and pension trustees when it comes to de-risking. Faced with unprecedented market volatility, there is a strong demand from trustees to secure their members' benefits through risk transfer. Conversely, market volatility has not changed the priority of pension schemes in the view of finance directors, with the majority not considering de-risking options in the short term. It seems that there needs to be a conversation between the sponsors and trustees in relation to the future of their pension scheme for the benefit of the members."

Seventy-six per cent of finance directors were not considering a pension de-risking strategy of any kind, while only 13 per cent acknowledged that their pension schemes' liabilities have become a higher priority in the economic turmoil.

DeKeizer added: "It's surprising to us how few finance directors are on record as seriously considering de-risking their pension scheme liabilities over the next two years. However, despite the seemingly low interest in a buyout by finance directors, if one can extrapolate that to the £1 trillion of pension liabilities in the UK, £20 billion could potentially be transferred to buyout. That is still a significant growth opportunity for the bulk annuity providers in this market."

MetLife's research also revealed that the highest method of managing risk that is under consideration for the next two years is longevity risk hedging solutions, at ten per cent, followed by buy-in and members options at eight per cent, and asset risk hedging solutions (six per cent).

- Pensions Age June 2009

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