By Sarah Mortimer
Feb 4 (Reuters) - Britain's Pension Insurance Corp is taking over the pension liabilities of the insolvent UK pension fund of Swiss aircraft services firm SR Technics, providing improved retirement benefits for the scheme's 2,500 members.
A growing number of so-called "final salary" pension schemes are running into trouble amid rising longevity and low UK government bond yields.
Pension Insurance Corp said on Monday it would assume responsibility for managing the 200 million pounds ($315 million) of pension liabilities held by the Trustees of the SR Technics UK Limited Pension Scheme.
SR Technics is part of Mubadala Aerospace.
Unable to pay its deficits on the final salary-linked pensions of its members, the UK arm of SR Technics relinquished its debt to the British pension lifeboat, the Pension Protection Fund (PPF), in 2010.
The PPF was launched in 2005 to take over the assets and liabilities of UK-based defined benefit pension schemes if an employer goes bust. It currently has around 12 billion pounds of assets under management, which it expects to rise to 17 billion by 2015.
"The current economic climate, combined with ultra-low gilt yields, means that some pension schemes are falling into the PPF due to the additional strain on their sponsor," Jay Shah, co-head of business origination at Pension Insurance Corp, said.
The PPF caps the amount of money it pays out to members of insolvent schemes, and the transaction with Pension Insurance Corp means members will receive more money than if they stayed in the PPF scheme.
"This is a very welcome transaction for our members who will see some uplift in their benefits," Colin Marsh of HR Trustees, chairman of the Trustees of the SR Technics UK Limited Pension Scheme.
But members still won't receive the full pension they would have received if SR Technics had not compromised its pension debt, Marsh told Reuters.
Pension Insurance Corp expects more similar deals in 2013 "as schemes move through this process", Shah said.