On the go: Pension Insurance Corporation has said that falling scheme liabilities will make pension risk transfer market volumes appear smaller over time, predicting a market of £30bn over the next year.
Defined benefit scheme funding levels have improved this year, with levels helped by the surge in gilt yields that followed September’s doomed “mini” Budget.
Liabilities have fallen dramatically over the past 12 months. The aggregate liabilities of the 5,215 schemes covered by the Pension Protection Fund’s 7800 Index fell from £1.69tn in October 2021 to £1.12tn in October 2022.
The aggregate funding position rose from £114.5bn to £374.7bn over the same period.
In a company update, PIC said that its portfolio had fallen from £44.1bn as of June 30 to £40.7bn as of September 30. Its insurance liabilities decreased from £37.6bn to £31.7bn in the same quarter.
It largely attributed these falls to the higher interest rate environment.
PIC’s new business premiums, meanwhile, have lifted from £2.4bn at its half-year point to £3.4bn to date.
It said it had a short-term pipeline of £10bn, along with an addressable market of a further £20bn, which it claimed could cover the benefits of 250,000 people.
“The rise in gilt yields means that trustees are now much better placed to transact than they have ever been and this is reflected in the expanded pipeline of new business, which, on an expected annuitants basis, is a record amount,” said PIC chief executive Tracy Blackwell.
