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Future demand outlook for the bulk annuity market - Hymans Robertson

Publication

Future demand outlook for the bulk annuity market

23 Apr 2020

The last decade saw the pension scheme bulk annuity market nurtured from its infancy to the impressive £40bn+ of premiums written in 2019 – an eight-fold increase compared to 2010.

Bulk annuity insurers started 2020 with a strong pipeline of new business but, like many businesses, the developing COVID-19 pandemic will necessitate insurers revisiting their forecasts. In the short term, we might expect dampened demand from pension schemes for a variety of reasons, such as:

  • Schemes putting the hedging of longevity risk on hold due to the potential for a one time spike in mortality;
  • Corporate led transactions stalling as businesses look to preserve their cashflows or from a heightened sensitivity to the accounting implications of transactions; and
  • Volatile market conditions widening pension scheme deficits and increasing transaction execution risk.

However, despite these short term headwinds, buy-in and buy-out transactions are continuing to flow, helped by attractive pricing following the fall in corporate bond prices. So, with a potential £1trn+ of DB pension liabilities looking to approach the market in the future, what can be expected from this market over the next decade and beyond?

Read our full publication where we take a look at:

  • Future bulk annuity volumes;
  • What could accelerate demand;
  • Improvements in bulk annuity pricing; and
  • Improvements in market conditions.

 Download your copy now!

If you have any questions about anything covered in this article, or would like to discuss how risk transfer could benefit your scheme, please don’t hesitate to get in touch with one of the Hymans Robertson Risk Transfer team.

Want to know more?

Get your copy of our 2020 Risk Transfer Report to find out more about the pension risk transfer - bulk anniuty market. Our experts track the key changes in this market and what these could be for DB pensions schemes. 

Alternatively, you can listen to our Hymans Robertson On... Risk Transfer podcast. In the first episode in this series, James Mullins and Michael Abramson discuss the process insurers go through when asked to quote for a transaction. Keep a look our for episodes two and three coming soon.

Register to join our webinar 27 April where our experts will chat through the opportunities and challenges for pension scheme risk transfer transactions. 

 

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