The report, which advises employers and trustees on what they need to do in order to transact, finds that:
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The growth of the medical underwriting market continues to offer attractive pricing opportunities for schemes of all sizes, with total volume of business for the specialist insurers now approaching £1bn
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New entrants into the market such as Scottish Widows will boost competition in the second half of 2015
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The advent of the new pension flexibilities introduced in April 2015 will have a number of potentially significant, positive impacts for the bulk annuity market
Gavin Markham, partner and head of bulk annuity consulting at Barnett Waddingham, commented:
“The bulk annuity market has made a steady start in 2015, and while it may not reach the record-breaking highs of 2014, looks to be another very strong year overall for the market.
“Insurance solutions are an ever increasing focus for the vast majority of defined benefit (DB) schemes as they continue to mature and progress along their respective de-risking journeys. The multi-billion pound transactions for the ICI Pension Fund and the TRW Pension Scheme completed in 2014 and the recent £1.6 buy-in for the Civil Aviation Authority Scheme demonstrate the feasibility of very large deals, supported by the strong appetite of both the insurers and reinsurers for longevity and wider bulk annuity risks.”
“In addition to an overview of the bulk annuity market, our report highlights some of the key developments and important issues for scheme trustees and sponsors to consider in relation to either buy-in or a buy-out.
“Looking forward, schemes will need to ensure that they are well positioned to take advantage of opportunities as they arise, particularly in a competitive market where demand is only likely to increase. Understanding the range of options, making the right choices and carrying out the appropriate preparatory steps will be key in achieving the best possible outcome”.
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