Four fifths of DB pension trustees to approach an insurer about de-risking within 5 years

Written by Adam Cadle

14/08/2023

A surge in bulk annuity deals is anticipated over the next five years, with over four fifths (86%) of pension scheme trustees expecting to approach an insurer in the next five years, according to new research from Standard Life, part of Phoenix Group.

The research among 50 pension trustees managing DB schemes with assets over £100m, found that 50% anticipate their scheme will approach an insurer about a buy-in or buy-out in the next one to five years. Over a third (36%) anticipate approaching an insurer even sooner, within the next year.

Furthermore, 95% of trustees reported that pricing was an important factor that determines whether they choose buy-in or buyout as their endgame strategy.

Kunal Sood, managing director of defined benefit solutions and reinsurance, at Standard Life, commented: “Bulk purchase annuity (BPA) deals have long been considered the gold standard when it comes to de-risking, but sufficient funding is a key factor and for many pension schemes, a BPA deal was not in their short-term horizon, even just a year ago. However, driven in part by the increase in gilt yields and inflation rates, scheme funding levels have improved to the point where BPA deals are now a near-term solution for many DB schemes, as our research shows. This new funding environment has helped drive demand across the market, which is on track to meet expectations that 2023 will be a record-breaking year in terms of BPA deal volumes.”

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