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Recent estimates
of the potential size of the UK bulk buy-out market in 2008 could
have been overvalued by up to £7bn, says Punter Southall Transaction
Services.
The consulting actuarial firm believes that, despite the recent
record £1bn transaction between the Trustees of the Cable
& Wireless Superannuation Fund and Prudential, estimates of
business as high as £15bn are “very unlikely”.
Punter Southall has conducted analysis of the bulk buy-out market
which, it says, suggests that the market will struggle to reach
£10bn in 2008, and that a more likely value of written business
will be closer to £8bn.
However, the organisation has not ruled out the possibility of the
market reaching £10bn should some other significant buy-outs,
of the same level as the Cable & Wireless agreement, be completed
in the next few months.
“We think that some people in the buy-out market are being
fairly optimistic and over-stating the extent of the growth in the
market by suggesting that the market will reach levels of £10-15bn
over 2008,” commented Richard Jones, principal at Punter Southall
Transaction Services.
“These figures seem to be based on the number of pension schemes
requesting buy-out quotes, but a vast number of these quotes are
purely speculative, and will not lead to business being written.
“Our analysis of the market suggests that with the exception
of the Cable & Wireless deal there has been relatively little
business written over the summer months. Since the market has written
annuities worth less than £6 billion for the year to date,
including yesterday’s deal (4 September 2008), we expect the
market will struggle to break the £10 billion barrier,”
he added.
- Pensions Age
September 2008
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