Press Releases

Total pension scheme buy-in and buy-out volumes reached £12bn in the first half of 2022 according to the latest research from Hymans Robertson. Demand for transactions was steady at the start of the year, the analysis from the leading pensions and financial services consultancy found, and gathered pace from Q2 onwards. During the same six-month period, Hymans Robertson led the advice on £2.5bn of pension scheme risk transfer transactions.

Commenting on the Chancellor’s emergency statement, Chris Arcari, Head of Capital Markets, Hymans Robertson, says:

“Today’s update from the Chancellor should, to some extent, improve the market’s view as to credibility of the government's fiscal plans, but political instability is not a favourable backdrop and gilt market volatility may remain high. We have seen 30 year yields down over 40Bps and sterling up close to 1% versus dollar, although given the ever-changing market conditions we are cautious about the longer term comfort today’s statement will bring. The rolling back of unfunded tax cuts to stimulate an economy with already high inflation may take a degree of pressure off the Bank of England, but inflation at a headline and core level remain at extremely elevated levels, and labour markets are tight. Indeed, a scaling back of the energy support package may mean headline inflation rises more than recent forecasts suggest. As a result we still expect a series of large interest rate rises from the Bank of England in November and December, though this is at least fully priced in to the front of the gilt market already..."

Commenting on the Draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2023, Patrick Bloomfield, Partner, Hymans Robertson, says:

“We support the policy intention underlying the regulations, that pension schemes should be well funded and defensively invested around the time all their members have retired.

“However, we are deeply concerned by three things in particular:

• That the draft regulations sacrifice scheme-specific flexibility, over-stepping into areas that should sit in the Regulator’s Code of Practice.
• That what a business can afford to pay to its pension schemes would be prioritised over how a business needs to invest to grow.
• The narrowness of the envisaged target investment strategies leaves no room for economically efficient investing and will supercharge systemic risks.

Commenting on the conclusion of the Bank of England’s bond buying activity, Chris Arcari, Head of Capital Market, Hymans Robertson, says:

“Should the Bank Of England step away from the market today as suggested, we could see gilt yields rising, and the feedback loop of selling of gilts, as pensions schemes struggle to maintain hedges, re-assert itself. To some extent, gilt yields, real and nominal, have repriced to reflect recent fundamental developments, but they have also faced intense technical headwinds, increasing volatility and placing further upwards pressure on yields. Fiscal announcements could influence yields in either way, depending on the markets view of their credibility..."

Commenting on the news that Alex Burghart has been appointed Minister for Pensions and Growth, Patrick Bloomfield, Partner, Hymans Robertson says:

“Now that we learn that Alex Burghart has been appointed as the Minister of Pensions and Growth we look forward to working with him in his new role. He enters this post at a worrying time, with Bank of England’s emergency bond buying scheme concluding within days. Further challenges await the new minister with the current cost of living crisis continuing to grow, but we believe there is an opportunity to make a strong and committed start to his role, through learning about how policy decisions impact the end user and listening to industry concerns about existing policies..."

Commenting on the ‘Managing investment and liquidity risk in the current economic climate’ statement from The Pensions Regulator, Kerry Lindsay, Head of Scheme Actuary Services, says:

“We welcome the statement from The Pensions Regulator (TPR) this morning, ahead of the expected conclusion of the Bank of England’s emergency bond buying scheme on Friday. Industry focus has understandably been on collateral calls for LDI funds, but rising interest rates also impact the value of member options like transfer values..."

Commenting on the Financial Reporting Council’s Actuarial Standard Technical Memorandum: AS TM1 Current Versions, Callum Stewart, Head of DC Investment, says:

“We are pleased to see The Financial Reporting Council’s (“FRC’s”) updated Technical Memorandum for the calculation of statutory money purchase illustrations. There is a heightened level of importance placed on this relative to previous versions because of the intended use of these calculations in figures that will be viewed by members in their pension dashboards..."

Commenting on the DWP’s Consultation on Broadening the Investment Opportunities of DC Pension Schemes, announced today, Callum Stewart, Head of DC Investment, Hymans Robertson, says:

“It is good to see the Government’s ongoing focus on facilitating investment from DC schemes in a wider universe of opportunities including illiquid assets. In particular, we are supportive of the requirement to require trustees to put in place formal policies on illiquid assets in their statements of investment principles..."

Risk transfer expert, Lara Desay, has joined Hymans Robertson, the leading pensions and financial services consultancy, as a Partner and Risk Transfer Specialist. Lara joins from Scottish Widows where she was Head of Origination and Operations for their bulk annuity team.

Annual DC pension contributions of a staggering 20% are needed for those earning £45k or more to reach the ‘comfortable’ [£33,600 per annum] level of the PLSA Retirement Living Standards according to analysis by Hymans Robertson in its latest research. Even the PLSA’s ‘moderate’ level appears unattainable for many, without an increase in contributions, the leading pensions and financial services firm warns.

Commenting on the impact of volatility in the gilts market and the impact on the de-risking market, Iain Pearce, Senior Risk Transfer Consultant, says:

“The UK has experienced unprecedented volatility in the gilts market in a ten days like no other. The market movements are consistent with extreme scenarios of models commonly used to manage pension scheme risks, and so have put pressure on LDI portfolios. These changes could be good or bad news for pension schemes looking to insure benefits, depending on their current levels of hedging and leverage. Schemes close to buy-out that are well hedged with low levels of leverage may be well placed to weather current market volatility, but may need to refresh their analysis following the material changes in markets. Pension schemes looking to insure a proportion of their liabilities will also need to take another look at their portfolio after the current volatility, which may result in some decisions to reduce the size or defer planned buy-ins. Schemes that are further away from buy-out with low levels of hedging will have seen a rapid improvement in their funding level and are likely to be executing plans to lock in these gains and accelerate their preparations for buy-out. We expect some transactions to slow down and others to accelerate as a result of this volatility."

Commenting on the past week and impact on the pensions and bond market, John Dickson, Senior Partner, Hymans Robertson says:

“As we approach the end of one of, if not the most, volatile weeks UK bond markets have ever experienced, it doesn’t feel like “unprecedented” quite does it justice.

“In my 30 years in the industry, I’ve experienced at least seven serious crash/systemic situations, the most recent of which, until last Friday, was the Covid19 pandemic. No two systemic events are ever the same, and that could not be more true when comparing the events of the global pandemic, which the world continues to recover from, and the very UK specific and systemic events of the last week or so..."