8 November 2022
DB pension schemes have seen enormous financial changes this year. The steady fall in gilt yields over the last decade has been reversed in less than a year, with huge changes to the size of pension scheme liabilities and funding levels.
Our latest research report asks what these changes mean for schemes considering insuring their liabilities through a buy-in or buy-out. We estimate that nearly 1 in 5 schemes are now fully funded on buy-out with an average funding improvement of c15% in the past year. Rising yields and improved insurer pricing have wiped off close to an astonishing £1 trillion from UK defined benefit pension scheme obligations.
We project this surge in buy-out funding levels could lead to a huge rise in buy-in / out volumes in the next three years, raising questions about insurer capacity, operational resource and pricing levels.
For many schemes, the sheer rate of improvement in their buy-out funding level will be as unexpected as it is welcome, and they will want to consider the steps they should be taking to benefit from this good news.
In our on-demand webinar our experts Charlie Finch, Partner, Catherine Hopper, Partner and David Lucas, Consultant, share key market insights and practical advice for schemes looking to maximise opportunities.