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The Prudential Bails Out Cable And Wireless

In a move which is being described as a win win for all parties involved it has been reported that Cable and Wireless has taken out a £1 billion annuity with Prudential to safeguard the future of the company's pension fund and dramatically reduce the liabilities of the scheme.

In a fairly complicated action the pension fund members will still be connected to Cable and Wireless but the Prudential will take over the pension payments activities of the fund and also become more involved in the future. The mixture of the Prudential annuity and the involvement of the group will reduce not only the long term liabilities of the fund but running costs as well.

This is the latest in a long line of bulk annuity deals which are now approaching £8 billion over the last 11 months alone. Those in the industry fully expect a number of similar deals to be announced in the future as the pension fund industry and company pension fund trustees start to converge and assist each other.

It has to be said that the pension fund sector of the UK is in a real mess and for many things will get worse before they get better. How much worse remains to be seen.......

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