14 April 2025
5 min
The Prudential Regulation Authority (PRA) have published a consultation paper which introduces the concept of the Matching Adjustment Investment Accelerator (MAIA).
Recap of Matching Adjustment
The “Matching Adjustment” (MA) is a fundamental component of pricing in the bulk annuity market. Without it, the cost of a buy-in or buy-out would be prohibitive to pension schemes. It allows insurers to discount their liabilities using the asset yield of the investments that back these liabilities, minus an allowance for credit risk known as the "fundamental spread”.
In this newsflash, our experts explore what this proposal could mean for the bulk annuity market.
If you have any questions or would like to discuss further, please get in touch.
This communication has been compiled by Hymans Robertson LLP® (HR) as a general information summary and is based on its understanding of events as at the date of publication, which may be subject to change. It is not to be relied upon for investment or financial decisions and is not a substitute for professional advice (including for legal, investment or tax advice) on specific circumstances. HR accepts no liability for errors or omissions or reliance on any statement or opinion. Where we have relied upon data provided by third parties, reasonable care has been taken to assess its accuracy however we provide no guarantee and accept no liability in respect of any errors made by any third party.
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