In recent years there has been a marked increase in bulk annuity transactions: buy-in and buy-out transactions between 2014 and 2017 totalled just under £50 billion and 2018 could be a record-breaking year. This briefing note explains why many schemes are approaching the market for quotations and why it might be time to consider a bulk annuity transaction for your pension scheme.
Background
In the past the cost of purchasing bulk annuities was sometimes a significant barrier for pension schemes looking to transfer risks to insurance companies. However, a number of factors are now driving more affordable buy-in/out pricing for an increasing number of pension schemes. These include:
– Healthy competition and numerous downward pressures on pricing
– Improved scheme funding levels
– Schemes maturing
– Investment in resources / larger teams