Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • January 2018
01

Bulk annuity market set for record 2018

Open-access content Tuesday 30th January 2018

The UK’s bulk annuity market is expected to grow strongly this year, with Willis Towers Watson (WLTW) predicting more than £15bn worth of deals over the course of 2018.


30 JAN 2018 | CHRIS SEEKINGS
Pension schemes expected to hedge liabilities over 2018 ©Shutterstock

The firm also anticipates a large number of mega deals to be executed this year, with at least five bulk annuities surpassing the £1bn mark, significantly more than the largest deal of 2017, which was for £725m.

In addition, following Phoenix Life entering the market last year, it is expected that there will be at least one new entrant over 2018, while a return to large buyouts is also predicted.

"Rightfully, both domestic and overseas investors are seeing the potential in the growth and attractive returns on investment within the bulk annuity market," WLTW senior director, Shelly Beard, said.

"We are currently seeing pension schemes taking advantage of attractive bulk annuity pricing, significant competition between insurers, and proactively using member option exercises to both give members flexibility and close buyout deficits."

It is also expected that pension schemes will continue to de-risk throughout the year while taking advantage of the lowest ever longevity pricing.

WLTW said that longevity hedging pricing is now partially reflecting the higher mortality rates of recent years, with over £10bn of liabilities predicted to be hedged over the course of 2018.

"We're helping several pension schemes for whom a longevity swap has minimal cost relative to their Technical Provisions longevity assumptions," Beard said.

"While this assumption is due to be updated at the next valuation, the opportunity to remove the risk instead of improving the funding level is compelling for the respective trustees and the sponsors."

WLTW also highlight how pension schemes investing in a buy-in are able to make significant gains relative to investing in gilts while also managing longevity risk.

"We are currently seeing the best pricing for buy-ins for a decade," Beard continued. "All of this is being driven largely by insurers deriving a higher investment return through sourcing direct investments.

"Such investments include funding student housing, airport landing slots and wind farms, which provide a good match for pension payments."


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our January 2018 issue of The Actuary.
Click here to view this issue
Filed in:
01

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Covenant Consultant

Leeds
£60-80k plus bonus and benefits
Reference
120863

Big 4 Consultancy – Senior Consultant / Manager, Life Actuarial

London / Bristol / Edinburgh
Competitive salary plus bonus
Reference
120771

Capital Optimisation & Balance Sheet Management – Insurance Consolidator

London, Dublin
Competitive salary package + study support if required
Reference
120860
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2021 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200