The bulk buy-in market is set to exceed £5bn this year, its highest level for five years according to Towers Watson. The firm also believes that there will be a surge in annuity alternatives.

Towers Watson buy-in specialist Ben Stone said: “Last year has been a year where pricing opportunities have been available to schemes that were data-ready and asset-ready for transaction. Not all schemes crossed the line before the year-end and we expect to see a number of completed deals in the first quarter of 2013.

“More generally, pension schemes that have tested the market in the last year are now much better placed to enter into transactions when the time arises and many schemes have good monitoring tools in place to quickly highlight market opportunities.”

On the subject of annuities, the company has predicted that there will be a turn away from traditional annuity purchases towards alternatives. The company’s financial planning group senior consultant Jackie Holmes said: “The combination of low gilt yields and the European Gender Directive mean that annuity rates are pretty much at an all time low, with male members particularly badly hit.

“Contrast this with the recent announcement that the maximum permitted income under capped drawdown will increase from 100 per cent to 120 per cent of GAD rates, together with the fact that members can use flexible drawdown provided they meet the Minimum Income Requirement of £20,000pa and it is easy to see why they are unlikely to want to explore alternatives.”

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