Risk Transfer Index
Track the cost of insuring all, or sections of, your pension scheme using Pension Insurance Corporation's quarterly Pension Risk Transfer Index.
The Index considers the cost of insuring the pension risk compared to the value of the assets held by the scheme. A higher value in the index means that insurance is more affordable. This could be because insurance costs have fallen and / or asset values have risen.
Pension Corporation is also pleased to publish a monthly Risk Transfer Index update in Pensions Week.
All editions of both the quarterly report and the monthly update are available for download below.
Pension Insurance Corporation would be happy to provide quotes for individual schemes. Please contact Mitul Magudia or Uzma Nazir on +44 20 7105 2000 for more information.
Pension Risk Transfer Index, Pensions Week, 12 March 2012
This month's index looks at the number of similarities between eurozone banks and DB pension funds. and with gilt yields still at a historical low, now is a good time to look at the impact on inflation and the effect this will have on pensioners
Pension Risk Transfer Index, Pensions Week, 13 February 2012
This month’s index shows that despite some positive signs, the market remains as volatile as ever and caution is the only sensible way to procede. Uncertainty still surrounds gilt yields, while the past provides us with an idea of what’s to come
Pension Risk Tracker Index Q1 2012
London, 7 February 2012 – UK defined benefit pension funds may face significant risks in the first few months of 2012, including a third round of Quantitative Easing in February, a potential Greek default in March, and a possible spike in the oil price, due to tensions in the Gulf, reversing the recent fall in inflation, any of which could drive out pension fund deficits, according to the latest Pension Risk Tracker Index published today by Pension Insurance Corporation.
For full press release please click HERE.
Pension Risk Transfer Index, Pensions Week, 16 January 2012
This month's index looks at what we can expect from a bumpy year ahead – where the only certainty is uncertainty, and with a significant increase in deficits what does the future have in store for pension funds that are still holding on to gilts?
Pension Risk Transfer Index Q3, 2011
London, 7 November 2011 – Defined benefit pension funds suffered considerably as equity markets plummeted and Gilt yields touched historic lows over the past three months, according to the latest Pension Risk Transfer Index, published today by Pension Insurance Corporation. The possible double whammy effect of Gilt yields falling 30bps and equity markets falling 20%, highlighted in the last Risk Transfer Index, actually took place.
For full press release click here
Pension Risk Transfer Index, Pensions Week, October 2011
This month's index shows a rise in pension scheme deficits and tumbling funding levels, taking affordability to near two-and-a-half-year lows, while also revealing the negative impact quantitative easing can have on corporate convenants.
Pension Risk Transfer Index, Pensions Week, September 2011
This month's index highlights the bashing that pension scheme funding levels sustained as a result of this summer's market crash, while also raising questions about the future viability of equity market investment for pension schemes.
Pension Risk Transfer Index, Pensions Week, July 2011
This month's index shows a rise in the affordability of pension risk transfer solutions, whilst the impact of a sovereign default on pension fund deficits may be being underestimated.
Pension Risk Transfer Index Q2, 2011
London, 25 July 2011 – Defined benefit pension funds could be hit hard should the European sovereign debt crisis create a re-run of the credit crunch, according to the latest Pension Risk Transfer Index, published today by Pension Insurance Corporation.
For full press release click here
Pension Risk Transfer Index, Pensions Week, June 2011
This month's index shows a rise in pensioner-only affordability, despite a drop in overall affordability and economic woes on both sides of the Atlantic. Meanwhile, the change to IAS 19 is expected to have a £10bn impact on profit and loss.
Pension Risk Transfer Index, Pensions Week, May 2011
Derisking has become more affordable over the past few months. Meanwhile, on inflation hedging there is still no big issuance of CPI debt, but RPI is making a good proxy for CPI-linked liabilities.
Pension Risk Transfer Index, Pensions Week, April 2011
This month's index shows all is not as it seems for affordability as equity markets go on a roller-coaster ride. And inflation, meanwhile, is presenting a dilemma for trustees, which could either cost schemes millions or erode liabilities.
PC Risk Transfer Index Q1 2011
The first half of 2011 will see trustees and sponsors of defined benefit pension funds capitalise on the year long rally in asset markets, if the first quarter is a guide. Many pension funds have been able to narrow their deficits and as a consequence it is possible that H1 figures for the pension insurance market will see a strong upswing on the same period last year.
To full press release click here
Pension Risk Transfer Index, Pensions Week, March 2011
Overall affordability for buyouts took a dip for many schemes in February despite a slight rise in the FTSE, while the measure of loss for male annuitants is reviewed following the European Court's judgement.
Pension Risk Transfer Index, Pensions Week, February 2011
As affordability rises, schemes must move quickly to gain the most from an insurance buyout. But while the IAS 19 deficit has improved, schemes must be mindful that analysts do not use this as a benchmark to buyout.
Pension Risk Transfer Index, Pensions Week, January 2011
The end of 2010 brought good news for trustees as insurance continued to become more affordable – positive returns on most asset classes being the main cause – though the effect of interest rates on Gilt yields held back overall affordability
Pension Risk Transfer Index, Pensions Week, December 2010
This month’s index shows while the buyout market hasn’t grown as much as expected in 2010 it has still been a significant year; and inflation continues to threaten pension scheme liability estimates.
Pension risk transfer index, Pensions Week, November 2010
This month's index shows a rise in the affordability of pension risk transfer solutions, while the accounting assumptions used by company analysts are being scrutinised for not offering enough disclosure.
Pension Risk Transfer Index, Pensions Week, October 2010
This month, the Risk Transfer Index demonstrates how Solvency II, when applied to the pension schemes of the FTSE100, compares with IAS 19.
Based on an assumption that the average scheme is invested 60% inequities and 40% in bonds, the chart shows a deficit to the SII levels would be significantly higher than the current IAS 19 deficit – £315 million against £51 million.
PC Risk Transfer Index Q3 2010
Q3 2010 was notable for the contradictory trends in the pension risk transfer market and underlying asset volatility, according to Pension Insurance Corporation's Q3 2010 Pension Risk Transfer Index.
- Overall affordability remained relatively stable
- There were significant swings in yields, impacting funding positions by as much as £50bn
- The quarter saw the innovative use of deferred premia and discussions with trustees on flexible contracts taking into account the switch from RPI to CPI
For full press release click here.
Pension Risk Transfer Index, Pensions Week, September 2010
Gilt yields are down and asset rises are not enough to stop liabilities rising overall. And yet the demand for derisking has seen a recent spike. The following tables and text explain all.
Pension Risk Transfer Index, Pensions Week, August 2010
The first chart tracks affordability for different membership types, the second is a projection of pension costs based on four RPI/CPI scenarios and shows the range of benefits of a hypothetical member who left a pension scheme 21 years ago – to reflect the 21 years of available RPI/CPI data.
Assuming the member wascollecting his pension today, and taking into account inflation, his annual benefit, depending on the legislation, would be:
- £2,018 under current rules
- £1,896 under scenario one
- £1,738 under scenario two
- £2,130 under scenario three.
Pension Risk Transfer Index, Pensions Week, July 2010
Following a low point for corporate bonds in the wake of the collapse of Lehman Brothers at the end of 2008, they have rallied in value as corporate bond spreads have generally narrowed over the past 15 months. Equities, on the other hand, have had a much more varied journey, illustrated strikingly by the surprising 3% fall in the FTSE100 on June 29, 2010.
PC Risk Transfer Index Q2 2010
Whilst overall affordability has gone down for most schemes, the levels of affordability for specific tranches of the pension scheme have remained constant – with older pensioners, which are often matched by gilts, being able to be insured for marginal cost over the scheme's funding levels.
For full press release click here.
PC Risk Transfer Index Q1 2010
The effective doubling of long-dated real gilt yields from ½% over inflation to 1% over the last three months has brought down UK pension scheme liabilities. Trustees will have accordingly seen deficits narrow by over £30 billion, according to Pension Corporation's Q1 2010 Pension Risk Transfer Index. Every ½% rise in real gilt yields could lower liabilities by 7%.
For full press release click here.
Pension Risk Transfer Index, Pensions Week, November 2011
This month's index shows that schemes holding gilts would be wise to cash them in through a pension insurance buy-in, while the strategy of rerisking with equities is a gamble for schemes and could push them towards a liquidity crunch
Pension Risk Transfer Index, Pensions Week, December 2011
This month's index shows another drop in affordability of bulk annuity insurance solutions, with the probability of the eurozone crisis growing worse and QE widening, while gilt yields are at their lowest level since the 1950s, and sinking lower
Pension Risk Tracker Index, Pensions Week, 9 April 2012
This month's analysis shows looming triennial valuations could reveal that some deficits have increase by around 12%, while an equity rally resulting in part from European refinancing presents trustees with some tough choices
