Half of DB pension liabilities to be insured by 2031

Around half of the UK’s £2trn defined benefit (DB) pension liabilities are expected to be insured by the end of 2031, according to analysis from Hymans Robertson.

The firm’s Annual Risk Transfer Report revealed that around £1/3trn pension scheme liabilities have already been insured, covering 1.4 million members’ benefits, with more than £150bn of this put in place in just the past three years.

Hymans Robertson partner and head of risk transfer, James Mullins, suggested that these figures will grow "materially" within the next 10 years, particularly in light of the "rapid growth in demand for pension schemes to insure their risks, along with improved pension scheme funding levels, attractive insurer pricing and new alternative risk transfer options".

“To the extent, we believe, that £1trn of pension scheme liabilities will have been insured, covering 5 million members’ benefits," he stated. "That’s half of all of the UK’s private sector DB pension scheme liabilities."

Mullins explained that this could also bring a "material shift" for pension scheme members over the next decade, as pensions have previously been managed, and paid, by a group of trustees, linked to their previous employer.

"Going forwards, their pensions will be increasingly managed, and paid, by insurance companies," he clarified.

“Removing the link between their pension and previous employer will feel like a significant change to many members and so needs careful communication to set out the benefits.

“Five million, or more, individuals will increasingly look to the UK insurance regime, with oversight from the Prudential Regulations Authority and the Financial Conduct Authority (FCA), to protect their pensions going forwards.”

    Share Story:

Recent Stories

Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios