Investment banks have begun marketing new pension-fund insurance products as companies across Europe face up to ballooning pension fund deficits. Companies have found themselves facing bigger, more visible shortfalls in retirement plans as new reporting rules require them to measure deficits more rigorously and display them more clearly on balance sheets.
In Britain, a newly appointed pensions regulator has wide-ranging powers to push companies to plug their deficits more regularly, to protect scheme members against the consequences of a bankruptcy.
Banks such as ABN Amro are now offering new financial packages to pension funds, seeing companies' efforts to offset risks as a potentially lucrative source of business.
Financial products such as letters of credit, which pay out in the event a company goes bust, could be used by firms to reassure retirement-scheme members that a fund will be secure, Francis Fernandes, ABN Amro's actuarial head, said.
"Such contingent structures will allow employers to enter into a more realistic discussion with trustees about funding deficits, because the trustees can draw comfort that strongly capitalised banks will pay up in the event of an employer insolvency."
ABN Amro has set up a pensions advisory group, while other companies such as HSBC have signed deals with funds to use instruments such as interest-rate swaps that can hedge risks.
The moves come as pension deficits have hit headlines - frustrating acquisitions, for example, and threatening tens of thousands of scheme members at recently bankrupted companies.
Last year, a hole in the fund of UK retail chain Marks & Spencer Plc played a part in squashing a potential bid for the company from entrepreneur Philip Green, and higher top-up payments are starting to affect corporate performance.
"Just about every company (in Europe) is contributing significantly more to its scheme than they have historically done, to the extent in some cases of nearly bankrupting them," said David McDonnell, chief executive of accounting firm Grant Thornton.