Page 10  Annex Chart 1: Bulk Purchase Annuities (BPAs) and longevity swap transactions £ billion) since 2010  Source: Lane Clark & Peacock  Page 11  Chart 2: Projected bulk annuity demand  Source: Hymans Robertson – Risk Transfer Report 2022 Demand is expected to ramp up as the majority of over £ trillion of Defined Benefit liabilities looks to find a home in the insurance market over the next 20 or so years. Projected demand averages c. £ per annum over the next 10 years, compared to a record £ in 2019. Page 12  Chart 3: Assets held in insurance firms’ Matching Adjustment (MA) portfolios at year-end 2020 £ billion)  Source: PRA analysis of Matching Adjustment (MA) Asset & Liability Data submissions by firms as at year-end 2020. Page 13  Chart 4: Matching Adjustment (MA) benefit by asset class at year-end 2020 (basis points)  Source: PRA analysis of Matching Adjustment (MA) Asset & Liability Data submissions by firms as at year-end 2020. Ranked by spread in basis points (lowest to highest) and does not show asset classes where there are limited holdings across the industry. Page 14  Chart 5: Matching Adjustment (MA) versus Market Value  Source: PRA analysis of Matching Adjustment (MA) Asset & Liability Data submissions by firms as at year-end 2020. Note: Assets shown are those in Component A of insurance firms’ Matching Adjustment (MA) portfolios only. See Paragraph 4.5 of Supervisory Statement 7/18 for further details. 1. Solvency II 2.
See John M. Hartwick (1977): “Intergenerational Equity and the Investment of Rents from Exhaustible Resources”, American Economic Review, 67, December, pp. 972–974. 8  NOU (Official Norwegian Report) 1983:27 “Petroleumsvirksomhetens framtid” [The future of petroleum activity], p. 90. 9  See Ministry of Finance calculations (Norwegian only): http://www.regjeringen.no/nb/dep/fin/tema/norsk_ okonomi/bruk-av-oljepenger-/hvor-mye-oljepenger-har-vi-brukt-sa-lang.html?id=450461  10  Torstein Bye, Ådne Cappelen, Torbjørn Eika, Eystein Gjelsvik and Øystein Olsen (1994): “Noen konsekvenser av petroleumsvirksomheten for norsk økonomi” [Some of the consequences of petroleum activity for the Norwegian economy], Statistics Norway Rapporter 94/1, p.36 (Norwegian only). BIS central bankers’ speeches  3  It may be that the oil fund has exceeded a critical value so that the ambition of a perpetual fund will be achieved. But history remains to be written. The story of John Collett might also have been written with a different pen when his wealth was at its peak. Within a few years, as much as 15–20 per cent of the welfare state could be financed by the return on the oil fund. But if we squander the capital in the fund, we will either have to match the shortfall with tax increases or make substantial cuts in government welfare. The gains – not only the costs – of building up an oil fund have thus been made visible. This also attracts its defenders. Large fortunes nevertheless give rise to concerns. As a minimum requirement, the management of oil wealth must not impair the productivity of labour and real capital.