Future demand outlook for the bulk annuity market

The last decade saw the pension scheme bulk annuity market nurtured from its infancy to the impressive £40bn+ of premiums written in 2019 – an eight-fold increase compared to 2010.

Bulk annuity insurers started 2020 with a strong pipeline of new business but, like many businesses, the developing COVID-19 pandemic will necessitate insurers revisiting their forecasts. In the short term, we might expect dampened demand from pension schemes for a variety of reasons, such as:

• Schemes putting the hedging of longevity risk on hold due to the potential for a one time spike in mortality;

• Corporate led transactions stalling as businesses look to preserve their cashflows or from a heightened sensitivity to the accounting implications of transactions; and

• Volatile market conditions widening pension scheme deficits and increasing transaction execution risk.

However, despite these short term headwinds, buy-in and buy-out transactions are continuing to flow, helped by attractive pricing following the fall in corporate bond prices. So, with a potential £1trn+ of DB pension liabilities looking to approach the market in the future, what can be expected from this market over the next decade and beyond?

Read our full publication where we take a look at:

• Future bulk annuity volumes;

• What could accelerate demand;

• Improvements in bulk annuity pricing; and

• Improvements in market conditions.

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If you have any questions about anything covered in this article, or would like to discuss how risk transfer could benefit your scheme, please don’t hesitate to get in touch with one of the Hymans Robertson Risk Transfer team.