Author: Samantha Downes

An insurance buy-out is not the only option in town for UK defined benefit pension schemes looking to de-risk – but is it still the best one?

Data – either a lack of it, too much of it or even the wrong kind – is proving a challenge to the UK’s pension risk transfer market.

Pension superfunds were hailed as the saviour of struggling UK defined benefit pension schemes, but progress has been slow.

Defined benefit (DB) pension schemes seeking an insurer-led buy-out will, in many instances, have to divest themselves of any illiquid assets they hold in their investment portfolio. With buy-out activity almost touching £50bn in the UK’s bulk purchase annuity market in 2023, the divestment of illiquid assets has become a frenzied process.  In the last 20 years, the secondary market for illiquid assets – one of several ways schemes can offload their holdings – has grown to £100bn, according to the Setter Capital Volume Report FY 2023. But since September 2022, many DB schemes may have been selling their illiquid…

The incoming Labour government was quick to make clear its commitment to the momentum sparked by last year’s Mansion House pension reforms.  During his brief tenure as Chancellor of the Exchequer, Jeremy Hunt committed the then Conservative-led regime to an ambitious programme of pension reforms that, among many things, included encouraging more investment in UK companies.  His replacement, Rachel Reeves, wasted no time in launching what she claimed was a ‘landmark pension review’ to boost investment, increase pension pots and tackle waste in the pensions system.  In its Pensions Bill confirmed in the King’s Speech last month, the new government…