The average time for UK pension schemes to buy out rose to 5.2 years in July 2023, according to analysis from Barnett Waddingham.
The monthly DB End Gauge index from Barnett Waddingham gives an estimate of how long it typically takes for UK pension schemes to accumulate enough cash to settle their liabilities with an insurance provider.
The DB End Gauge index has 5.2 years till buyout as of July 31, 2023. From 30 June 2023 to 31 July 2023, the index increased slightly, moving from 5.1 years to 5.2 years. The analysis indicates that the shift was brought about by an increase in the value assigned to scheme liabilities as a result of a little decrease in average swap rates and bond yields. This more than offset the impact of positive asset returns over the period.
The annual accounts of the FTSE 350 firms’ companies are used to gather the publicly available data used to generate the DB End Gauge. As a result, it is calculated as the average of the anticipated time to attain buyout financing for each scheme and covers about 160 enterprises with DB pension arrangements.
Barnett Waddingham principal Lewys Curteis says: “The increase in the index has been caused by an increase in liability values over the month, following a small reduction in average swap rates and bond yields. This more than offset the impact of positive asset returns over the period.
“After the dramatic financial market changes experienced last year, this period of relative calm provides an ideal opportunity to revisit DB scheme funding and investment strategies to ensure that these are consistent with company objectives and risk appetites.”
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