January 2022
07Jan

UK. FTSE 350 DB pension deficit falls by £28bn; ‘looming risks’ ahead

The aggregate accounting deficit of FTSE 350 companies’ defined benefit (DB) pension schemes fell by £28bn during December, ending the year at £76bn, according to Mercer's latest Pensions Risk Survey. It revealed that liability values fell from from £962bn to £913bn during the month, although asset values also declined, from £858bn to £837bn. However, whilst the deficit had fallen compared to November, it had increased year-on-year, with an aggregate deficit of £70bn recorded at the end of 2020 and of £41bn...

January 7, 2022
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06Jan

UK pension risk settlements to see volumes of over £45bn in 2021: Aon

Aon expects the UK pension risk settlement market to see volumes of over £45 billion reported for full-year 2021, making it the third year in a row that it has reached this level. Compared with recent years, the market in the first half of 2021 was relatively subdued with £7.7 billion of bulk annuity deals completed. However, the pace then accelerated in the next six months and Aon expects that there will be close to £30 billion of bulk annuity deals...

January 6, 2022
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December 2021
29Dec

What Drives Variation in Investor Portfolios? Evidence from Retirement Plans

By Mark Egan, Alexander MacKay & Hanbin Yang We study empirical patterns in investment behavior using a comprehensive data set of defined contribution plans. Using plan-level portfolio allocation data for the near universe of 401(k) plans over the period 2009-2019, we document substantial differences in investment behavior across plans. Plans with wealthier and more educated participants tend to have higher equity exposure while plans with more retirees and minorities tend to have lower equity exposure. These patterns cannot be explained...

December 29, 2021
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16Dec

Aegon strikes deal with RGA to reinsure longevity risk in pensions

Aegon, the Dutch insurer, said on Wednesday it has struck a deal with Reinsurance Group of America (RGA) to hedge the risk that people in its Dutch pensions business will live longer than expected. The move "improves the risk profile of this business and is another step to generate stable, regular, and reliable cash flows," said CEO Lard Friese in a statement. Aegon said under the deal "initially" it would sacrifice 40 million euros ($45 million) in operating capital generation at...

December 16, 2021
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15Dec

UK. Pension risk settlement market set to pass £45bn by end of 2021

The UK pension risk settlement market is expected to exceed £45bn by the end of 2021, representing the third year in a row that activity has reached this level, according to analysis from Aon. The firm explained that whilst the market was “relatively subdued” in the first half of 2021, with £7.7bn of bulk annuity deals completed, the pace has since accelerated. As a result, Aon predicted that there will be close to £30bn of bulk annuity deals completed by the...

December 15, 2021
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November 2021
26Nov

An Overview of Retirement Income Planning

By Wade D. Pfau Retirement income planning has emerged as a distinct field within financial planning with the realization that risks change dramatically in retirement. The combination of longevity risk, increasing market risk triggered by taking distributions from assets, and spending shocks create new challenges. Wealth management has traditionally focused on accumulating assets without applying further thought to these differences happening after retirement. Retirees experience reduced capacity to bear financial market risk once they have retired. This calls for different...

November 26, 2021
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24Nov

No pension. No savings. No future. No wonder we’re betting the house on crypto

By Rohit Thawani I must begin this article by stating that the information I’m providing is not financial advice. I think I legally have to say that because I heard it on a podcast or whatever, I really don’t know. But, if you’re taking crypto advice from me, that might be your first problem. It all started with a missed shot. Let’s go back to 2004, when I invested my $5,000 life savings into Apple, a company I truly believed in. It...

November 24, 2021
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17Nov

Milliman: Pension risk transfer premiums more competitive

Pension risk transfer premiums became more competitive in October as deal volume is set to increase in the fourth quarter, a study by Milliman showed. The estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) was 102.5% as of Oct. 31, down from 102.7% as of Sept. 30, according to a report of the Milliman Pension Buyout index. September's premium was up significantly from 102.2% as of Aug. 31. Meanwhile, the average annuity purchase rates among the most competitive rates...

November 17, 2021
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12Nov

U.S. Steel to Transfer About $284 Million of Pension Obligations

United States Steel Corp. said it will transfer about $284 million of pension plan obligations via a purchase of annuity contracts from two units of Legal & General Group PLC. The purchase results in the transfer of administrative and benefit-paying responsibilities for about 17,800 U.S. retirees and beneficiaries. The steel company said "this transaction is yet another meaningful step in strengthening the company's balance sheet and further de-risking our pension plan, a plan that remains more than 100% funded and is...

November 12, 2021
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October 2021
29Oct

U.S. Pension Risk Transfer Market Hits an Estimated $16 Billion in Q3, Second Largest Reported Quarter to Date

Legal & General Retirement America (LGRA), a leading provider of pension risk solutions in the US, today released its third quarter Pension Risk Transfer (PRT) Monitor. The Monitor, which examines PRT transaction volume in the United States, estimates more than $16 billion in sales occurred over the past three months. Fueled by strong equity returns and rising interest rates, third quarter transaction volume was nearly twice the combined $8.8 billion recorded during the first two quarters of 2021. The third quarter...

October 29, 2021
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