Pensions - Articles - Barnett Waddingham comments on Purple Book review

 “In the last couple of years, the bulk annuity market has been achieving impressive results. In 2014, a record £13bn of deals over the year were completed while 2015 has been another strong year, with deals completed having already exceeding £10bn. A few multi-billion pound transactions have been key in increasing these figures. There are signs that 2016 could be even better, as insurers get to grips with the introduction of Solvency II capital requirements.

 “As schemes mature, the Purple Book shows that they are continuing to de-risk, shunning equities in favour of bonds or more sophisticated investment strategies. We expect that many schemes will have aspirations to buy-in or buy-out, particularly where they are closed. The fall in funding levels over 2015 will mean this is a challenging target but if schemes are prepared, and ready to transact when an opportunity arises, it is not unachievable. In particular, the advent of medical underwriting and the ability to insure large-pension members – known as “top-slicing” – means that schemes can now manage their risks more affordably.”