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The Actuary The magazine of the Institute & Faculty of Actuaries

'Transfer window' for pension buy-ins may not last

Research by the professional services firm found this £3bn of business was driven by favourable pricing conditions and increasing innovation in financing risk transfer deals, as well as companies looking to focus more on their core businesses rather than insurance.

Buy-in volume was also driven by a fear that Solvency II - introduced from January 2014 - will make buy-ins more difficult and expensive because of the increased capital requirements on insurers.

KPMG warned this limits the window of opportunity for sponsoring employers to undertake buy-ins before deals become much less affordable.

It also said companies have been urging scheme trustees to buy-in over the past year to take advantage of current conditions.

Pensions partner David Fripp said: "The stars are currently aligned exceptionally favourably for pensions buy-in but this situation may not last."

He added: "Many businesses looking to de-risk their pension liabilities are hurrying to take advantage of the favourable pricing currently available and the opportunities to fund buy-ins with existing business and non-cash assets to get deals done quickly before Solvency II impacts are felt."

Last month, LCP said buy-ins were at their most attractive price since 2008.