With only just over a month to go until the end of the year, 2013 looks set to be the biggest year ever for pension risk transfer transactions according to Towers Watson.
To date, over 150 transactions have been completed this year, and the value of bulk annuity premiums is approaching £7 billion. This compares with £4.5bn in 2012. The largest volume of business in any one year was £8.7bn in 2008.
Adding in the value of liabilities covered by longevity swaps/insurance, risks have been transferred on more than £10bn of pension liabilities so far this year. This compares with £6.7bn in 2012. The largest volume of business in any one year was £12.6bn (in 2011).
Ian Aley, senior consultant at Towers Watson, said: “Our experience this year is that over 90 per cent of the cases that have requested quotations have resulted in a transaction. It is clear that those schemes that have ensured that their data is in good order and have established the appropriate governance processes needed to transact quickly have been best able to take advantage of the favourable market conditions.
“Despite the concerns about capacity that were raised when some providers left the market, schemes that look serious about transacting have found that pricing is competitive.
“Interestingly this year has been an increase in the number of non-pensioner members covered in the completed transactions. Traditionally the pricing for these members has been a long way from that for pensioner members but our experience is that the gap has closed this year.”
The largest bulk annuity transaction so far this year was £1.5bn for the EMI Group Pension Fund. The largest longevity swap was £3.2bn for the BAE Systems 2000 Pension Plan.
|
