Record 2.2 bln stg pension buyout deals in Q1-Aon

LONDON, May 12 (Reuters) - Pension buyout deals hit a record level in Britain in the first three months of the year, according to data published on Monday by pensions advisory firm Aon Consulting.

Transactions worth a total of 2.2 billion pounds ($4.29 billion) were done during the quarter, 350 million pounds more than in the fourth quarter of 2007, the previous record period.

The size and number of deals is evidence that the market -- where specialist firms manage all or part of companies' final-salary pension schemes for a fee -- has finally taken off, Aon said.

The first quarter saw a number of large, high-profile deals where companies including TI, Morgan Crucible (MGCR.L), Powell Duffryn and Rank (RNK.L) offloaded some or all of their pensions liabilities to specialist firms.

The rapid pace of deal-making seen at the end of last year was maintained in the first quarter, with 87 transactions done in the first three months of the year, with an average value of around 25 million pounds -- a significant increase on the average size of deals done in the first three quarters of 2007.

If this pace continues, pension buyout deals could touch 10 billion pounds in 2008 -- nearly triple 2007 volumes, Aon said.

Increasing numbers of firms are looking to offload their final-salary pension schemes, which guarantee employees an income in retirement linked to their pay when they leave.

Most have now been closed either to new members or to future accrual of benefits and their firms expect to pass them to buyout insurers at some point in the future, according to recent research by pension consultants Lane Clark & Peacock.

Tougher regulation and proposed accounting changes, which could force firms to pump billions of pounds extra into their schemes, have made these pension arrangements an increasing financial headache for many companies.

Competition between buyout firms, including Legal & General (LGEN.L), Aegon (AEGN.AS), Paternoster, Lucida and MetLife (MET.N), has caused prices to fall. The credit crisis has also brought down the accounting value of pension liabilities, making it cheaper to do buyouts.

There is also a strong pipeline of potential future deals, Aon said. Buyout firms provided quotes to take on all or part of the liabilities of 401 schemes during the first quarter, with a total value of 46.1 billion pounds, it said. (Reporting by Simon Challis; Editing by Stephen Weeks)