UK - Demand for bulk annuities has trebled over the last 12 months sparking fears that the market will reach its capacity by the end of the year.
Insurance giant Prudential said that enquiries have inc-reased three-fold during the last year, while Legal & General reports that interest has “busied up” noticeably.
Prudential head of bulk annuities Ted Clack admitted a spate of scheme wind-ups would prompt serious capacity problems.
And Legal & General head of bulk annuities Denis Canham (pictured) is compiling figures on the number of schemes in wind-up, to establish the scale of the problem.
Canham said: “We need to know how many schemes there are so we know what the state of play is. We are not a bottomless pit. One expert estimated there is £30bn floating around and since that is bigger than both Prudential or our market cap, we would have to say ‘no’ if it all flooded in at the same time.”
London School of Economics governor Ros Altmann has urged the government to take action before capacity is reached.
Altmann predicted annuities could be “scarce” in as little as six months and the government had a “window of opportunity” to halt the crisis.
She said: “This is a signal to the government to put annuity purchase on hold for the moment and look into the workings of the market.
“Because annuities are such bad value not only are the people being hit by the fact that they are not protected but also by the fact that more of their assets are being used than should be to buy out the pensions.
The government has a chance to do something before it becomes impossible.”
Ex-BHS owner Dominic Chappell has been ordered to pay a total of £87,000 in fines and court costs after he was found guilty of failing to provide The Pensions Regulator (TPR) with information.
The Department for Work and Pensions (DWP) has said it while believes in the benefits of consolidating defined benefit (DB) schemes, there are significant issues to overcome.
There is just one week left to register to enter the Workplace Savings and Benefits Awards 2018.
Nearly a third (32%) of employers believe new technologies, such as augmented and virtual reality, will play a part in benefits communications, latest research from Aon Employee Benefits reveals.