Plan Sponsors Increasingly Look to Transfer Risk to External Parties
20 June 2012 (PLANSPONSOREurope.com) – Plan sponsors worldwide are increasingly accelerating their intentions to manage their pension risk and ultimately transfer it to external parties, according to research from Mercer.
Mercer’s UK figures* for the last five years show a significant increase in the size of bulk annuity and longevity swap deals. Close to 100 bulk annuity and longevity swaps deals over £50m in size have been made in the UK since 2007, the combined value of these deals having now reached over £33bn. The last few years have also seen an increasing number of FTSE companies completing them. In 2011, c150 deals with a total worth of c£10.2bn were made, including major deals by FTSE100 companies ITV and Rolls Royce.
Mercer Global Head of defined benefit risk and Senior Partner, Frank Oldham: “The market for transferring pension risk away from plan sponsors has developed significantly in the UK in recent years with the number, size and sophistication of these deals all moving on in leaps and bounds. Other European countries, particularly the Netherlands and Ireland, are also starting to see more activity and interest in this area, and so it was therefore just a matter of time before these developments transferred to a latent US market.”