Buyout Market Watch OCT 2018

01 November 2018

In this October 2018 Market Watch, we take a long look at the bulk annuity market and seek views from a panel of professional trustees. Some very exciting pricing has driven the volume of transactions during 2018 to an all-time high.

Members taking individual transfers are also at an all-time high and getting higher, meaning that money is now starting to leave defined benefit (DB) schemes at a serious rate. Insurer turnaround times, some now down at 5 days, are stunning, but at other times there have been months of delays as capacity issues strike.

£10bn to £20bn of DB will move to defined contribution (DC) arrangements via individual member transfers. This is serious money, equating to around £40bn leaving DB schemes this year (setting aside the £12bn Prudential back book transaction). L&G’s record £4.4bn British Airways transaction is another key milestone.

Not satisfied with this rate of outflow, the Government is keen to look at how to “consolidate away” even more liability. We look at two fledgling consolidators (Clara Pensions and The Pension SuperFund) on page 7.

Not only money but technology is moving fast. Our ground breaking singlefile transfer system, launched earlier this year, looks set to get quotes on 30 schemes (and hopefully to transact most of them) and has achieved record insurer turnaround times and engagement levels. We look at two of the first such transactions to complete on page 4.

We hope you enjoy the articles and would welcome your views.

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