UK DB schemes see big bulk-annuity opportunities in wake of Brexit

first_imgTrustees and sponsors of defined benefit (DB) pension schemes in the UK need to take another look at risk levels in their schemes given the swiftly changing Brexit environment, and could cash in on good bulk-annuity opportunities as pricing fluctuates, according to consultants.Mercer’s UK leader of bulk pensions insurance advisory, David Ellis, said: “Rapidly changing political and economic circumstances following the UK’s vote to leave the European Union have reinforced the need for trustees and sponsors to look again at their pension schemes.”In the company’s latest market review of UK DB bulk pensions insurance, he said trustees and sponsors should check that what they were doing continued to be relevant, and that the scheme’s overall level of risk was still appropriate.In the second half of this year, market volatility will be a key theme, said Harry Harper of the Mercer division. “There is potential for significant bulk-annuity pricing opportunities to appear, for those in the right place at the right time,” he said.The second half promises to be “interesting” now that the volume of quotation requests from pension schemes increased rapidly mid-year, he said.“The nature of the quotation requests is also changing – instead of the pensioner-only pricing requests from earlier in 2016, we now see a growing number of exercises that include deferred members,” Harper said.On deferred member pricing, he said the wide range seen since the introduction of Solvency II from 1 January 2016 showed indications of stabilising. “We see signs of more aggressive pricing for those members in the second half of the year,” he said. Meanwhile, Aon Hewitt said in its UK bulk-annuity market update that, over the first half of this year, bulk annuity pricing had improved year on year relative to other asset classes used to back pension liabilities.Volatile financial markets following the EU referendum in the UK have created pricing opportunities, it said.“Some providers indicated that their pricing improved materially relative to Gilts in the first days after the Brexit vote, driven by a widening in credit spreads,” Aon Hewitt said in the report. “This was an excellent opportunity for schemes seeking to settle risk.”Of course, schemes need to be actively in the market to get such deals, it added.“A scheme can engage with the market, obtain competitive quotations, select a preferred insurer, agree terms and then monitor movements in the insurer’s pricing against an agreed trigger,” the firm said.In the first half of July, it said credit spreads had fallen back – “but there is every chance of further market disruption over the coming months given the political environment”. Earlier this week, the closed ICI Pension Fund insured £750m (€891m) of its DB liabilities with Legal & General, in its fifth buy-in, just after the EU referendum.L&G commented that the “strength and depth” of its relationship with the ICI Pension Fund had allowed it to move fast when the market opportunity arose.last_img read more

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Giggs demands response from players

first_imgRyan Giggs has demanded an instant response from Manchester United after suffering yet another body blow to their Premier League title aspirations. It is not what United imagined the situation would be despite the obvious upheaval created by Sir Alex Ferguson’s exit and everyone at Old Trafford recognises the form must be reversed quickly if the club are to stand any hope of retaining their crown. “We have to pick ourselves up,” said Giggs. “We can’t feel sorry for ourselves for too long. We have a home game against Newcastle on Saturday and hopefully we will get a different result. “We were on a pretty good run. We just have to get over this disappointment now and get on another.” As he is also a member of David Moyes’ coaching team, Giggs knows where United’s present problems lie. Yet again on Wednesday, they were guilty of wasting opportunities, which left them vulnerable to a late goal, which duly arrived when makeshift full-back Antonio Valencia failed to track Bryan Oviedo, leaving the Costa Rican unmarked at the far post to finish off Romelu Lukaku’s mis-hit shot. It leaves United 12 points adrift of leaders Arsenal and five behind Liverpool, who occupy the final Champions League berth. But Giggs is not panicking. Good enough to smash five past Bayer Leverkusen in one of the all-time great European performances barely a week ago, Wednesday’s 1-0 home defeat by Everton means they have collected just two points from their past three games. They currently lie ninth in the table and their tally of 22 points from 14 games represents their worst return since the start of the 2001-02 campaign, when they ended up finishing third, 10 behind champions Arsenal. Press Association “The gap is bridgeable,” said the veteran Welshman. “Hopefully we can start picking up points again but we will get a better idea come the new year. “We have had a few disappointing results over the last couple of weeks. “The performances haven’t been that bad. Maybe we are just not getting the rub of the green or taking our chances when we should. “It is the story of a few games this season. When we have been on top we have not taken our chances. If you do that in this league you are going to get punished.” For obvious reasons, Giggs has to stress the positives. Yet, with Wayne Rooney suspended after picking up his fifth booking and a date for Robin van Persie’s return following groin and toe problems still shrouded in mystery, the backdrop to Newcastle’s weekend visit remains gloomy. Indeed, with so many rivals looking strong, it is not certain United will even get back into contention for a top four berth, let alone get any higher. “I don’t think they will win the league and they may even struggle for the top four,” Robbie Fowler told BBC Match of the Day. “I know people will say I am an ex-Liverpool player but Manchester United have been a little bit poor this year.” It is an assessment shared by many, including some rather closer to the Old Trafford scene than Fowler. Inevitably, Moyes has started to receive some criticism from United fans, who have singled out his only significant signing Marouane Fellaini, plus England duo Danny Welbeck and Tom Cleverley for criticism. At Everton, Moyes did have a history of starting seasons slowly, then coming with a run at the end. He can only hope that same style has followed him down the East Lancs Road because failure to qualify for the Champions League, whilst not catastrophic financially, would be a significant blow to United’s prestige and affect their attractiveness for potential new signings. “When you are behind in the Premier League and trying to catch four or five teams who are above you that you feel are genuine contenders, it is difficult,” former striker Lou Macari told MUTV. “You cannot afford to slip up. “A draw would have been a bit of a disaster. This was a defeat. “If you look at the league table just now you think how can you get back at all those in front of you.” last_img read more

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