Buyout push before the arrival of Solvency II
Total 2011 de-risking transactions (to the end of the third quarter) came to £3.85bn, according to JLT Pension Capital Strategies.
Pensioner buyins remain the most popular contracts. This is due to affordability, as pensioners remain "cheaper" than deferred members, and strained funding levels.
Legal and General’s £1.1bn buyin of the T&N Retirement Benefit Scheme was the largest single deal to date for a scheme which had exited the Pension Protection Fund Assessment period.
At the beginning of the third quarter of 2011, Credit Suisse announced a £1.7bn longevity swap transaction with ITV for 12,000 of its members. This is the first bespoke longevity deal announced during 2011.
Tiziana Perrella, head of buyout services at JLT Pension Capital Strategies, commented:
"As soaring debt and increasing liabilities become more of an issue for pensions schemes, trustees are seeking ways to derisk so we expect to see more buyout solutions being offered in 2012."
Ms Perrella continued: "We expect many trustees and employers to push for transactions to be complete prior to the implementation of Solvency II. The final impact of Solvency II requirements on bulk insurers remains unclear, leading to uncertainty in future pricing bases."
Author: Pensions World
Pensions World is the leading monthly magazine for pensions professionals published by Butterworths Tolley.
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