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If the UK’s
pensions buy-out market is to successfully meet trustee demand,
it will have to grow by nearly £250bn over the next three
years, says pension solution provider Pension Corporation.
According to new research by Pension Corporation’s integrated
insurance company, Pension Insurance Corporation (PIC), this represents
an increase of more than 80 times over the cumulative value of buy-outs
in 2007, and Pension Corporation estimates that £30bn of additional
solvency capital is necessary in order to support buy-out demand.
The findings are supported by a recent poll carried out by Hymans
Robertson which showed that nearly one third of trustees expect
their pension scheme to be the subject of buy-out in the next ten
years.
Pension Corporation predicted that the buy-out market has the potential
to surpass £10bn by the end of 2008, although the estimated
size of the market is something of a hot topic in the pensions forum,
with Punter
Southall earlier this year claiming the market will struggle
to expand.
The organisation also said that the corporate deals market has covered
substantial ground in working towards this much needed capacity.
“These estimates from both Hymans Robertson and ourselves
reaffirm the immense growth potential inherent in the pension solutions
sector,” said Edmund Truell, chief executive of Pension Corporation.
John Coomber, executive vice chairman of Pension Corporation, added:
“I believe we are witnessing a paradigm shift in the pensions’
industry. Buyouts are the obvious way for trustees and sponsors
to take risk off the balance sheet and secure members’ benefits.
Pension Corporation has a strong support base of committed blue
chip investors and we are confident of our capacity to accommodate
the market’s growing appetite for pension solutions.”
- Pensions Age
September 2008
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