Pension risk transfers appeal to many U.K. trustees – survey

Improved funding levels have many U.K. defined benefit plan trustees eyeing bulk purchase annuities, according to a survey released Monday by Standard Life.

The insurer, part of Phoenix Group, surveyed 50 trustees managing pension funds that each have more than £100 million ($131 million) in assets and found that 50% anticipate a bulk annuity transaction within five years, while 36% of them expect to do so within one year.

The research was conducted for Standard Life by Censuswide between April 28 and May 9.

For 92% of the trustees surveyed, improved funding levels driven by higher gilt yields, rising inflation rates and slower longevity improvements were key factors. Kunal Sood, managing director of defined benefit solutions and reinsurance for Standard Life, said in a news release about the survey that while bulk purchase annuities were not on DB trustees' immediate horizons "even just a year ago," funding levels have improved to the point that they now are for many pension funds.

Continued good economic news will also help, and the market "is on track to meet expectations that 2023 will be a record-breaking year in terms of BPA deal volumes," Mr. Sood said.

For 95% of the trustees surveyed, pricing was also an important factor, Standard Life found.