ABI research: Bulk-insured pension fund assets reach £30 billion

Bulk-insured pension providers have reported that pension funds under management totaled £30 billion at the end of 2010, according to research by the Association of British Insurers (ABI).

The pension schemes of over 600,000 members are now covered by these bulk buy-outs.

In response to increased interest, the ABI and the National Association of Pension Funds (NAPF) have published an updated guide to help trustees better understand the process of entering into a buy-out or buy-in bulk-insured pension scheme.

The Bulk-insured pensions guidance: a good practice guide 2011 includes:

  • Preparation objectives of a buy-in or buy out to facilitate a smooth, speedy and focused process.
  • The legal requirements in key areas such as discretionary benefits.
  • Partial buy-ins and the role of the Pension Protection Fund (PPF)
  • A glossary of terms to translate language used in buy-in and buy-out transactions.

Mark Edwards, assistant director, financial regulation and tax, at the ABI, said: “The number of pensions covered by bulk buy-outs reached over 600,000 and the assets under management were in excess of £30 billion in 2010.

“It is therefore clear that the insurance industry is able to provide tailored solutions to suit the needs and circumstances of individual pension schemes, such as longevity-only insurance to mitigate the risk of pension scheme members living longer than expected.

“Pension fund trustees are faced with an ever-increasing number of challenges around scheme funding.

“Insurance company buy-outs and buy-ins can be a very powerful tool for organisations and trustees to manage the risks inherent in providing an occupational pension scheme and can also provide greater security of benefits for scheme members.

“The guide aims to demystify the process for trustees and help them make the process as smooth as possible.”

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