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

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • March 2019
03

Huge increase in FTSE 100 pension scheme buy-outs predicted

Open-access content 25th March 2019

The UK’s 100 largest listed companies are set to transfer £300bn of pension liabilities to insurers through full buy-outs over the next decade, up from just £5bn today.

2


That is according to a new report from consultancy firm Lane Clark & Peacock (LCP), which said improvements in affordability have led to a "new phase" for the buy-out market.

The analysis shows that buy-outs from FTSE 100 defined benefit (DB) schemes have been hindered by companies' large deficits and £800bn in legacy pension liabilities.

But the average scheme has seen its buy-out funding position improve by 10% over the past two years amid falling life expectancies and strong price competition between insurers.

If current conditions persist, LCP predicts that up to 40 FTSE 100 companies are likely to reach, or be close to being fully funded on buy-out within the next decade.

"In the short term, the insurance market is entering a pension scheme buy-out boom due to increased affordability and attractive pricing," LCP partner, Charlie Finch, said.

"As the demand for buy-ins and buy-outs grows, the key question is whether the market is approaching a tipping point where pension plan demand outstrips available insurance capacity."

LCP said that the availability of suitable investments to support current pricing levels is the most pressing constraint that could impact insurer capacity in the UK.

And from an operational standpoint, the number of transactions cannot increase significantly without insurers expanding their teams or further developments in technology.

This comes after separate research found that the number of UK DB scheme trustees targeting buy-outs with insurers has increased threefold over the last five years. 

"At the current rate of growth, demand looks set to outstrip capacity over the medium term putting upward pressure on pricing and squeezing less attractive schemes out of the market," Finch said.

"What is clear is that 2019 is set to be another bumper year for companies and trustees getting on top of their pension plan risks and liabilities." 


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

This article appeared in our March 2019 issue of The Actuary.
Click here to view this issue
Filed in:
03
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

GI Model development contractor

£700 - £1000 per day
Reference
119012

Pricing Actuary - Marine, Credit, Aviation

London (Central)
Total package circa £230K
Reference
119011

Capital Modelling Actuary

London, England
£70000 - £100000 per annum
Reference
119010
See all jobs »
 
 
 
 

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
​
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

© 2020 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