KPMG's Asset Backed Funding Survey 2015

KPMG's Asset Backed Funding Survey 2015

The latest results from KPMG’s ABF Update shows a surge in the value of ABF for pensions.

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Asset Backed Funding for Pensions PDF Cover

The 5th edition of KPMG's asset backed funding survey revealed that 12 new asset-backed contributions (ABCs) were announced in 2014, totalling £1.24bn. While this is fewer than in 2013 when 21 new ABCs totalling £2bn were announced, it demonstrated a continued interest in asset-backed funding as a solution.Key highlights include

  • Last year saw a 48% reduction in asset-backed funding exercises compared with 2013, although interest in other alternative funding exercises such as cash escrow and reservoir trusts increased
  • Pension trustees are buying into smart deficit solutions, using brand value, intra-group loans and property assets
  • An increasing number of ABCs now use a term of 25 years, the maximum permitted by HM Revenue & Customs, to be eligible for up front tax relief

We predict 2015 will see a surge in interest of asset-backed funding exercises, as pension scheme sponsors look to address deficits from record low gilt yields.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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