The investment banking community is sniffing out a business opportunity in the growing risk and volatility surrounding defined-benefit plans: whether they can assume the liability, manage the assets more effectively than plan sponsors yet more aggressively than insurance companies, and make the price attractive to companies.
The concept already is trickling into the market in the United Kingdom, where insurer Aegon has teamed up with UBS Global Asset Management to establish a staged-annuity product that may be a little more appealing to a pension plan sponsor than a traditional, high-cost annuity contract. Pension experts say the U.S. investment banking community is abuzz with ideas on how it can bring some comparable offering to the U.S. market as well.
