UK - Standard Life is limiting the amount of bulk annuity buyout business it takes on over fears of improved mortality rates.
The insurer will now only accept bulk buyouts of pension liabilities if the scheme’s sponsor has an existing relationship with the firm or if it is willing to take on a new policy on the back of the buyout.
Standard Life marketing director Barry O’Dwyer said: “We don’t want to market this product actively or look for new business.
“The prices being charged are not enough to cover the potential improvements in mortality. It is not a market we want to be in.”
The move will make it harder for both schemes in wind-up and for schemes merely looking to secure part of their liabilities, to make bulk annuity purchases.
HighamNobbs Consulting partner Russell Agius said: “Unfortunately, there is only a limited number of insurers prepared to write bulk buyout business.
“Each departure makes it more important for the department for work and pensions to consider alternatives to buyout.”
At present only L&G and Prudential openly offer to insure scheme liabilities.
Law Debenture director Mark Ashworth said: “We do respect the current players but it can only be healthy to see more major insurers in the market.”
But he believes the government must “do its bit to help” by issuing more Limited Price Indexation bonds, which insurers could use to write the business.
Standard Life’s move follows the decision by Legal & General to impose a £500m limit on the size of the schemes it will take on in wind-up.
L&G corporate annuities director Dennis Canham said: “The problem with underwriting pension schemes is that once the deal has been done there is no going back.”
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