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UK pensions insurance deals to rise more than 25% in 2022-adviser
Global Banking & Finance Review®
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LONDON (Reuters) -Britain is likely to see around 35 billion pounds ($41.62 billion) in pensions buy-in and buy-out deals in 2022, up more than 25% from 2021, consultants Hymans Robertson said on Wednesday.
LONDON (Reuters) -Britain is likely to see around 35 billion pounds ($41.62 billion) in pensions buy-in and buy-out deals in 2022, up more than 25% from 2021, consultants Hymans Robertson said on Wednesday.
Such deals involve offloading the risk of company defined benefit, or final salary, pension schemes to an insurer. Pensions’ funding positions have improved following government and central bank stimulus due to the COVID-19 pandemic, making such deals cheaper for some companies, industry specialists say. The deals remove balance sheet risk for companies and make up a large chunk of revenues for insurers such as Legal & General. “The insurers are getting very busy, receiving a significant number of buy-in quotation requests over the summer,” said James Mullins, head of risk transfer at Hymans Robertson. UK pension buy-in and buy-out market volumes are expected to total 10 billion-12 billion pounds in the first half, Hymans Robertson said.
The pensions insurance market saw a record 44 billion pounds in deals in 2019. Hymans Robertson said it expected deals in 2023 to surpass that record.
($1 = 0.8410 pounds)
(Reporting by Carolyn Cohn; Editing by Frank Jack Daniel and Angus MacSwan)
A pension buy-in is a financial transaction where a company transfers the liabilities of its pension scheme to an insurance company, effectively offloading the risk associated with the pension plan.
A pension buy-out occurs when a company fully transfers its pension liabilities to an insurance company, which then takes over the responsibility of paying the pension benefits to the retirees.
A defined benefit pension scheme is a retirement plan where the employer guarantees a specific payout upon retirement, based on factors like salary history and duration of employment.
Insurers play a crucial role in pension schemes by providing financial products that allow companies to transfer their pension liabilities, thereby reducing their financial risk and stabilizing their balance sheets.
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