Press release

17 June 2008

The significant increase in pension buyouts seen in early 2008 was forecast to continue at The Actuarial Profession’s Finance, Investment and Risk Management Convention (FIRM) yesterday.

In his presentation titled Modern Approaches to Financing Pension Commitments, guest speaker Steven Lowe told delegates at the convention that buyouts had reached a value of £4.1 billion in the six months to March 31 2008.

He said: “That is a seven-fold increase on the six months earlier, which is a very significant change.”

Mr Lowe, of Pension Corporation, said the trend was likely to continue, with bulk annuity transfers forecast to reach £10 billion in 2008.

He attributed the increase in the number of bulk annuity transfers to proposed regulatory and legislative changes, increased competition between insurers, investment market volatility and pressure on the time of senior management of companies.

“Most chief executive officers and chief financial officers want to focus on their main area of business. It is in their interest to do something to ensure the security of their pension fundss and many are deciding to give it to investment professionals to run.”

Mr Lowe said the increase in buyouts was positive, providing a less risky option for pension members.

“As much as people might want to trust their employers who they might have worked with for 30 years, realistically, they benefit from reduced risk in a buyout by an FSA authorised and regulated financial institution.”

The FIRM Convention was held at Hilton Manchester Deansgate Hotel on 16-17 June.

Enquiries: Tel. Fleur Morrison on 020 7632 1453 or email fleur.morrison@actuaries.org.uk

Notes to Editors

1. Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.
2. Members of the Profession have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.
3. The Profession is governed jointly by the Faculty of Actuaries in Edinburgh and the Institute of Actuaries in London. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of the Profession in society.