A poll by Pension Insurance Corporation of 140 trustees, consultants, and lawyers working in the bulk annuity market showed that 47% expected the market to be between £50bn and £60bn next year. By contrast, 45% of respondents thought it would be between £40bn and £50bn.
Delegates at PIC’s Annual Market Update, where the polling was conducted, were also asked about other topical questions relating to defined benefit pension schemes.
On the topic of surplus release, 57% of those polled believe surplus should only be returned to the sponsor after buyout. Very few (3%) voted that trustees should give the surplus to the sponsor and re-risk the pension scheme to make up the difference.
In terms of challenges facing new entrants to the bulk annuity market, 63% voted that track record with trustees was the top concern. Other answers were asset sourcing capability (16%), and pricing capability (13%)
With regards to the biggest impact on pricing levels in the next 12 months, 52% believed more large transactions taking up capacity would be the main issue, with 25% suggesting new entrants to the market, 18% suggesting funded reinsurance, and 5% Solvency UK.
“We were delighted that such a strong cross-section of the industry were able to join us for our Annual Review of the Year. As the results of our polling show, the bulk annuity market is now firmly established as a £50bn a year market. It’s worth noting that the market volume size range reflects the uncertainty about the timing of larger scheme transactions. One or two of these transactions in a year will likely push the market up to £60bn,” said Mitul Magudia, Chief Origination Officer at PIC.