Leah Evans, EY Parthenon Head of Pension Risk Transfer, comments on the market: “After a slow H1 – where deal volumes were low – the pipeline for H2 is showing relative strength and activity is expected to pick up. The H1 lull allowed some insurers to progress risk transfer activity with their own staff pension schemes, and in the absence of mega deals, many smaller schemes in particular were better able to access the market. This, compounded with some providers increasingly using funded reinsurance arrangements to quote on a wider range of schemes in a less capital intensive way, resulted in greater competition in the market than has been seen for some time.
“ESG continues to be high up on the agenda for pension scheme trustees. All of the main insurers have now made public commitments to progress their ESG targets, although the scope and detail of commitment varies widely across the market, from top-line pledges to achieve net zero by 2050 to more extensive climate modelling and disclosure. While growing in importance, ESG has not quite cut through as a core deciding factor for trustees when selecting a bulk annuity provider, with price and security remaining the ultimate selection criteria. But with increased competition across the market, providers are now seeking to differentiate themselves further, and the expectation is that trustees will be looking much more closely at what providers are actually doing on ESG.”
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