In a landscape transformed by evolving market dynamics, heightened financial responsibilities and shifting regulations, pension scheme advisers, trustees and sponsors face unprecedented challenges.
The market volatility and high interest rates in recent years has resulted in many UK Defined Benefit (DB) pension schemes finding themselves in a much better funding position than they may have been expecting, leading to a shift in scheme strategy and a sharp increase in demand for endgame solutions, with 2023 a record year for risk transfer transactions.
Alongside the increase in demand, the changing landscape of the de-risking market has meant that schemes are now experiencing more choice, with new entrants to the market and insurers broadening their offerings, with an increase in the number of alternative risk-transfer solutions.
Back stronger than ever
In September 2023, we announced our successful re-entry into the bulk annuity market, with two buy-in transactions totalling £617m, and another in March this year, totalling £309m, bringing total sales to over £900million.
After exiting the market 8 years ago, we’ve re-focused our strategic priorities to focus on providing innovative solutions for UK DB pension schemes. We spent a large part of last year reviewing our bulk annuity offering and ensuring the correct building blocks are in place to provide the best service to new clients and customers, such as onboarding a new 3rd party administrator and reviewing our member experience pathway.
As well as an ever increasing number of bulk annuity transactions, improved scheme funding levels have led to a shift in endgame strategies with many schemes investigating whether run on is a more suitable goal. Additionally, some schemes and sponsors are considering buyout in the longer-term but are unable to transact imminently due to a number of reasons, such as data issues or illiquid assets. Alternative solutions that allow schemes and sponsors to mitigate risk, generate potential surplus and still fulfil their obligations to their members have therefore come into sharper focus. This is where we’re confident we can add value, and why now is the right time for us to re-enter the market.
Leveraging our business
One of our key differentiators in this market is our powerful, integrated business model. Our three business segments; Asset Management, Life, and Wealth operate in harmony together, leveraging capabilities and expertise across the business. The combination of our strong shareholder balance sheet and our strong With-Profits Fund, one of the largest of its kind in the UK, means we have the opportunity to develop new and compelling solutions to meet the needs of our clients.
A partner, not just a provider
At M&G, we recognise the pivotal role played by pension scheme advisers, trustees and sponsors in safeguarding the financial futures of scheme members. We understand the time constraints, the weight of decision-making, and the need for tailored solutions that address the unique needs of each scheme.
Our re-entry into the market signifies more than just providing solutions; it embodies our commitment to offering a comprehensive service that places relationships and people at the forefront. We stand as a partner, not just a provider, dedicated to supporting pension schemes at every stage of their de-risking journey.
M&G plc, incorporated and registered in England and Wales. Registered office: 10 Fenchurch Avenue, London EC3M 5AG. Registered number 11444019. M&G plc is a holding company, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority. ‘Prudential’ is a trading name of The Prudential Assurance Company Limited which is registered in England and Wales. Registered office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 15454. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.