The impact of Solvency II on bulk annuity pricing will be limited, but schemes with generous options could see hefty increases, finds Jack Jones
Increased insurer competition, greater regulatory certainty and easier access to capital could boost the bulk annuity market 50% next year, according to a report from LCP.
Insurers completed just £800m of buyouts and buy-ins in the first quarter of the year, according research from LCP, far below the £4.4bn written in the first quarter of 2014.
Insurance companies are now providing benefits for more than 500,000 UK defined benefit members after a record year for buyout and buy-ins, research shows.
Industry figures are expecting a host of de-risking insurance deals to be undertaken by "quasi-public sector" schemes in the coming months.
Buyout deals totalled £8.1bn last year, with £1.6bn of this business written in Q4 alone, research by JLT Pension Capital Strategies shows.
Insurers will be forced to increase buyout prices in the medium term unless CPI-linked instruments are issued in the coming months, Punter Southall says.