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However, according to Paternoster, a regulated insurance company which takes responsibility for the risks associated with companies’ defined benefit pension schemes, there was an overall reduction in the cost of insuring the risks associated with the pension schemes in the first quarter of 2008.

In its quarterly buy-out affordability index, Paternoster showed that the cost of securing liabilities of a defined benefit scheme reduced by 8 per cent in the first quarter of 2008.

The index looked at the cost of securing the liabilities of deferred and pensioner members of a typical defined benefit scheme.

In the first quarter, the cost of securing a typical group of deferred member liabilities fell by 10 per cent, while it reduced by 6 per cent for pensioner members.

The cost of securing all liabilities fell by 8 per cent but rose 3 per cent in April.

Mark Wood, chief executive at Paternoster, said that the cost of securing liabilities with an insurer during the first quarter dropped as a result of credit spreads widening.

"During April however buy-out became more expensive due to the growing perception that liquidity was slowly returning to credit markets. As a consequence we saw spreads tightening," he said.

"Clearly, the impact of market movements on the cost of securing liabilities can be significant and trustees and their sponsoring organisations should focus on this as they manage their process of evaluating a buy-out. The cost of 'missing the market' could be considerable."

Recent research revealed that pension buy-outs have become increasingly attractive in recent months as large companies look to off-load their pension schemes. (See story.)