July 2020

31Jul

COVID-19 Pandemic to Intensify Risks for Insurers: EU Regulator

Insurers in the European Union are confronted with risks on several fronts that are intensified by the COVID-19 pandemic, and could face lengthy legal battles from claims relating to lockdowns, the bloc’s insurance watchdog said on Thursday. Read also Jamaica. COVID Economic Task Force Favours Lifting Pension Investment Limits Insurers and reinsurers had a “solid and comfortable” capital buffer going into the crisis, the European Insurance and Occupational Pensions Authority (EIOPA) said in a Financial Stability Report. However, a high...

July 31, 2020
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20Jul

Financial Corner: How Can You Help Lower Your Longevity Risk?

Insurance companies and pension funds view longevity risk as the risk they incur when their assumptions about life expectancies and mortality rates are incorrect, leading to higher payout levels. But for you, as an individual investor, longevity risk is less technical and more emotional: it’s the risk of outliving your money. To assess your own longevity risk, you’ll first want to make an educated guess about your life span, based on your health and family history. Plus, you’ve got...

July 20, 2020
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14Jul

UK. Does benchmarking DB transfers against a workplace pension make sense?

Under new rules to be introduced from 1st October, IFAs who are recommending a transfer out of a DB pension will need to benchmark the proposed destination for the funds against a low-cost workplace pension. But many of these workplace pensions were designed for automatic enrolment and regular contributions by active members rather than large transfers in from Defined Benefit (DB) pension schemes by members approaching retirement. New analysis from consultants LCP based on a survey of master trusts...

July 14, 2020
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08Jul

Coronavirus Risks Manageable for Canadian Pension Funds

The 11 largest pension funds in Canada, which managed CAD1.7 trillion of net assets at year-end 2019, are expected to withstand market downturns within their respective ratings given their long-term investment horizons, ability to adjust contribution rates and the captive nature of inflows, Fitch Ratings says. However, near-term valuations and returns are expected to be pressured from the economic fallout of the coronavirus pandemic, given the breadth and global nature of its impact. Fund performance will depend on asset...

July 8, 2020
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07Jul

The coronavirus crisis is pushing 13 UK universities towards insolvency, study says

Social distancing measures, travel restrictions and lockdowns have tested the ability of universities to survive without students. The institutions at higher risk of collapse are those with a large share of international students and those with significant pension obligations, the IFS said. Thirteen universities, or colleges, in the U.K. are at risk of going bankrupt as the coronavirus pandemic hits their finances and challenges the entire sector, a study by Institute for Fiscal Studies warned Monday. Social distancing...

July 7, 2020
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June 2020

26Jun

Actuarial and Financial Risks in Life Insurance, Pensions Pensions and Household Finance

By Luca Regis The recent regulatory changes, together with the increasing awareness of the variety of sources of uncertainty that affect the activities of insurance and pension funds, have generated increasing attention towards insurance risk management theory and practice. Against this background, this Special Issue collects relevant contributions on a variety of issues encompassing longevity risk modelling, solvency requirements, risk management, and risk sharing. This collection of papers provides insights, from both a theoretical and a practical perspective,...

June 26, 2020
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26Jun

How People React to Pension Risk

By Nicolas Salamanca, Andries de Grip, Olaf Sleijpen We show that people exposed to greater pension risk are less likely to invest in risky assets. We exploit a reform that links people’s future pension benefits to their pension funds’ funding ratio — a measure of the fund’s financial health — making funding ratios a fund-specific measure of pension risk. The effect of pension risk is stronger for people who are better informed about their pensions, for retirees and...

June 26, 2020
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26Jun

UK. Key workers being targeted by pension transfer scammers – APJ

There has been an uptick in the number of key workers being targeted by scammers to transfer their pensions into high-risk self-invested personal pensions (Sipps), APJ Solicitors has said. The law firm revealed that is has been contacted by an increased number of NHS staff and other key workers who have been convinced to transfer their pensions and lose thousands of pounds in the process. It noted that the NHS defined benefit (DB) scheme is “one of the best...

June 26, 2020
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24Jun

Milliman analysis: Estimated cost of retiree pension risk transfer drops significantly, from 105.5% to 103.9% in May

Milliman, Inc., a premier global consulting and actuarial firm, today announced the latest results of its new Milliman Pension Buyout Index (MPBI). As the Pension Risk Transfer (PRT) market continues to grow, it has become increasingly important to monitor the annuity market for plan sponsors that are considering transferring retiree pension obligations to an insurer. The MPBI uses the FTSE Above Median AA Curve, along with annuity purchase composite interest rates from insurers, to estimate the average cost...

June 24, 2020
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23Jun

COVID19 impact on the pension risk transfer market

This has had a compounding impact on the premium rates insurers charge for BPA policies. The strong demand from trustees and sponsors of pension schemes to purchase BPAs during 2019 gave insurers a strong negotiating hand to choose which counterparties they would engage with. Consequently, insurers’ focus has gravitated towards larger transactions (where the prize was worth the risk of being unsuccessful). Whilst competition amongst insurers enabled larger schemes to maintain a comparatively strong negotiating...

June 23, 2020
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