Buyouts have become more feasible as annuity pricing for non-pensioners has improved, but some experts say many schemes still have a long way to go before being able to afford a buyout or buy-in transaction.
Short-term bulk annuity pricing has become less predictable due to volatile market conditions and insurers adjusting to Solvency II, according to Aon Hewitt.
The consultant’s bulk annuity market update for January 2016 highlighted an expected increase in the cost for bulk annuities covering members who had not yet retired.
However, material change was not expected in the best available pricing for pensioners as a result of Solvency II – the new EU-wide capital regime for insurers.
Aon Hewitt risk settlement adviser Dominic Grimley pointed out many providers had already planned their market models in the medical underwriting market and that pricing had settled down accordingly, adding: “Pricing for some insurers may have gone up slightly but the best pricing is very similar to where it was last year and we’ve not seeing any shock results from the first auctions this year post-Solvency II.”
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