View more on these topics

BoE chief King backs longevity-linked bonds for annuities

The Government could provide a more buoyant annuity market through the launch of bonds linked to mortality indices, according to Bank of England governor Mervyn King.

Books of annuity contracts are one of the few financial liabilities
that cannot be reinsured but the launch of longevity-linked bonds
would provide a secondary market for the first time.

The idea, originally put forward by Shadow Work and Pensions
Secretary David Willetts, has gained renewed impetus after King threw
his weight behind the idea in a speech last week.

The ABI and the Institute of Actuaries are carrying out research into
improving the supply side of the annuity supply/demand equation.

Legal & General pensions strategy director Adrian Boulding says
bonds linked to mortality indices, such as those published by the IoA
and the Government Actuary, could be tendered to the market as gilts
are and he is convinced that they would get a good price.

King says: “Private annuity providers could use them to hedge
aggregate annuity risk. By assuming longevity risk, the Government
would make it possible for the private sector to purchase such bonds
and in turn support a private market in annuities.”

Boulding says: “It may unlock the supply problems afflicting the
annuity market today.”

Recommended

Cavanagh Group issues profit warning

Cavanagh Group has issued a profit warning, blaming the integration of Ernst & Young Financial Management and higher than expected trading costs. The IFA which specialises in advising the legal and accountancy professions says it expects to go into profit in the first half of 2005 rather than December 2004 as previously predicted. Shares fell […]

Why prevention is better than cure

Quoting the famous adage, prevention is better than cure; there are many proactive benefits that can improve wellness in the workplace, decrease stress, increase staff morale and reduce absenteeism, as well as attracting and retaining employees of a higher standard. With a recent study showing that employees in Britain are working below peak productivity, preventative benefits can ensure you address potential health issues or causes of stress at their source and ensure productivity in the workplace remains at an optimum level. With this in mind, how are you using preventative benefits to help keep your workforce happy and healthy?

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com