This paper has been sent to Pension PlayPen to accompany the presentation given by William McGrath and Con Keating on Tuesday 2nd September. The video and slides of this presentation are available on this link. This is the final piece in the jigsaw. It is from C-Suite- owned by William McGrath.
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PRT Industry Papers and Articles
| The ABI case to Government appears to be weaken the solvency regime and we will put more into UK productive assets. The Oxera report, commissioned by ABI, concludes that life insurers should be left alone as they are doing a great job. The market is very profitable but there is no case for CMA intervention.
PIC’s paper, aimed at MP’s, emphasises buyouts offer “absolute confidence” to members. What “pension protection” means in their view is given the cost of falling into PPF, it’s worth giving away for nothing discretion out of which the real risk from inflation could be addressed. PIC’s paper misrepresents the PPF reductions. The LCP paper is just one of the sector’s typically sugary endorsement of the risk transfer market. It is an endlessly competitive world. Neither PIC nor L&G address inflation reducing pension values and that discretionary payments could address the risk if the scheme ran on. |
ABI Article
The Bulk Purchase Annuity Market: A Quiet Powerhouse in the Pensions Ecosystem | ABI
The article states that ABI commissioned a report by Oxera
“to carry out independent analysis of this market’s evolution and the policy considerations that could shape its future.”
It concludes that all is well. There is competition. Any intervention through backing run-on or using PPF to be a consolidator is completely unnecessary. ABI and Oxera do not address member interests in having a share of value to address the sharp decreases in real value of pensions which has recently occurred.
Oxera Report
Oxera report – Bulk Purchase Annuity market – 21.07.2025.docx
PIC Benefits of Buyout report for MP’s
The benefits of buyout – Pension Risk Transfer ‘PRT’ explained – PIC
LCP Risk Transfer Report 2025
LCP pensions risk transfer report 2025
Aon Risk Settlement Bulletin Q3 2025 – Competitive Pricing – Aon report
Like nearly all actuarial consultants and investment advisors, Aon is happy to back the cycle of derisking and passing money over to life insurers.
The Aon graphic highlights PRT deals are priced close to gilts. What the MA spread increases and risk margin cuts mean for life insurers’ profits is not addressed.
L&G Demystifying Pension Buyouts
Legal & General | Demystifying pension buyouts
Rolls Royce / PIC – Scheme Buy-in
PIC completes £4.3 billion full buy-in of the Rolls-Royce UK Pension Fund – PIC
| The Rolls Royce explanation of why a deal with PIC is in member interests assumes that a buyout offers much better protection to members because of their capital requirement and that is why all that surplus disappears.
Without any numbers the Chair of rolls Royce explains to members that it is quite clearly in their interests to have a pension from PIC (shortly to be owned by Athora rather than by a Swiss family and sovereign wealth fund) rather than sticking with the long time sponsor. |
Press Articles: PRT Industry Opposing Use of Surpluses
Henry Tapper blog: references and links to a number of relevant articles
The Pension Security Alliance response to proposed Government pension reforms
DB pension reforms put peoples pension incomes at risk
| That surpluses might go to anyone but a life insurer infuriates the Pension Security Alliance (lead by PIC, Just and John Ralfe). |
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Critique of PRT industry
| Whether the arrival of private capital into pension markets is for the best has some doubters.
That is before you get to the legal ruling on Pension Risk Transfers in USA from major corporates to Apollo, and questions about whether such steps are actually in members’ best interests. They may not be open and shut cases (see piece by Encore Fiduciary FSCS is unfunded, untested, no Government guarantee back stop. Notes on funded re and Solvency Triggered Termination Rights do suggest PRA has less than the complete peace of mind that life insurers say is provided. See PRA letter to life insurers – below. |
Gareth Truran – Bank of England
Letter to life insurers July 2025:
Solvency-triggered termination rights clauses in bulk purchase annuity transactions
Speech to BPA April 2025:
Overseeing BPA growth safely – Speech by Gareth Truran | Bank of England
Henry Tapper blog article: Apollo ownership credentials
The article references and links to the following articles in the Financial Times and Bloomberg
Financial Times article
Apollo’s insurer points finger at rivals over potential conflicts
Apollo has hit back against criticism of the close ties between its asset management arm and its in-house insurer. It noted that KKR, Blackstone and Brookfield have larger proportions of related party transactions.
USA Regulators are scrutinising the ties between asset managers and insurers as private equity groups have piled into the sector.
What constitutes “affiliated” is under debate.
Bloomberg Article on Apollo
Private capital firms are going to remarkable lengths to squeeze more returns for the regulated insurance entities.
Private capital has been buying up life insurers and annuity providers. Using the cash the invest in private credit can bring capital charges. The approach is then packaged into a range of assets in a Bermuda based vehicle. It then sells bonds with investment grade credit ratings and long lifespans. A 40 year final maturity profile is longer than that of the asset used as collateral – so they will need to be swapped out.
How well the approach fits with UK matching adjustment and in particular the incoming “Matching Adjustment Investment Accelerator” (MAIA) is an issue which PRA will be contemplating. MAIA enables insurers to self-certify an asset meet regulatory requirements for 2 years.
Academy of Life Planning: Article by Steve Conley
💣 The Bermuda Backdoor: Where Your Pension Goes to Vanish – Academy of Life Planning
Encore Fiduciary