Report: Pensions de-risking steps up a gear

The 11th annual report on the buy-in, buy-out and longevity swap market from LCP, concludes that de-risking through buy-ins and buy-outs has reached the highest level of affordability since before the banking crisis in 2008.

Key findings:

• One in five FTSE 100 pension schemes are now estimated to be more than 80 per cent funded relative to the cost of buy-out with an insurer, up from one in eight a year ago. 
• The average buy-out funding level has increased by nearly 10 per cent since the immediate aftermath of the European Referendum in August 2016. 
• LCP predicts a marked increase in demand from pension plans to de-risk in 2018, but also an increase in insurer capacity to cater for higher volumes.

The report includes: a review of 2017 and LCP’s predictions for 2018; current pricing opportunities for buy-out and buy-in; details about how phased buy-in strategies provide cost effective de-risking for schemes working towards being fully funded; understanding longevity risk and longevity swap structures; and, how longevity swap structures have evolved to reduce costs and better meet pension schemes' needs.