Expert Warns on UK Pensions as Bank of England Takes Action
Aon Investments alerts UK insurers about risks in pension buyouts using foreign cash
UK, Pensions, Bank of England, Aon Investments, Insurance
London: Aon Investments, a consultancy, has advised UK insurance companies about pension buyouts. They’ve helped with over £72 billion in these transactions.
In a recent letter, Aon urged insurers to be clear about using foreign cash for pensions. This is important for the savers whose pensions are involved.
Last month, the Daily Express reported that the Bank of England is worried about this trend. They’re concerned about using foreign cash through funded reinsurance for pension buyouts.
The UK’s financial regulator sees a potential “endemic risk” in this practice. They’ve warned insurers about the complexities that could expose UK savers to risks.
Gareth Truran and Shoib Khan from Aon highlighted these risks in their advisory notice. They stressed the need for transparency to protect savers.
While the Bank of England hasn’t said pensions are at immediate risk, they will monitor the situation closely. They’re ready to take action if needed.
This week, Martin Bird from Aon reminded insurers to communicate clearly with pension savers. Transparency is key to maintaining trust.
Bird also pointed out the importance of being open about green policies. Clients want to know how insurers handle issues like climate change and diversity.
He expressed concerns that insurers might struggle to keep up with the demand for pension buyouts. They need to adapt to the growing business volumes.
The letter also discussed illiquid assets, which can complicate pension buyouts. Selling these assets can be costly and time-consuming for pension schemes.
Aon believes innovation is needed to help schemes transition to insurance more efficiently. This is especially true for those facing unexpected challenges.