The pension risk transfer market could write more than £10bn of business in 2009, estimates Pension Corporation.

The buy-out and risk management solutions provider predicts that trustees and sponsors of defined benefit (DB) pension funds will push the market forward to a growth of 25 per cent more than the 2008 market.

The prediction comes as the firm launches its Pension Risk Transfer Index, which uncovers the volatility in pension schemes' asset values. This is supposed to help trustees and sponsors to consider which course of action to take towards a full buyout.

Pensions Corporation said that longevity risk will be the primary focus for trustees and sponsors, and expects it to account for around 60 per cent of the risk transfer market by the end of 2009.

"We are a little over half way through the year and we have seen around £4bn of new business written," said Edmund Truell, Pension Corporation group CEO and founder.

"With several large schemes looking at transacting over the next few months we could well see the market for pension risk transfer exceed £10bn. However, the market will look substantially different from last year with pension schemes looking in particular at removing longevity risk."

Meanwhile, Hymans Robertson has reported that its latest analysis of the pensions scheme de-risking market shows that the value of DIY buy-in and longevity hedge deals made in 2009 so far is almost double that of traditional buyout/buy-in deals over the same period.

James Mullins, a senior liability management specialist at the independent pensions and benefits consultancy, commented: "The value of traditional buyout/buy-in deals struck during Q2 2009 feel to £600million giving a total of £1.5bn for the first half of 2009 and an average deal size of less than £20million. On the other hand, the DIY buy-in and longevity hedge market has seen two massive deals struck during 2009, covering £2.7bn of pensioner liabilities."

Hymans Robertson's expert in pension scheme settlement solutions, Richard Shackleton, predicted that 2009 buyout and buy-in deals are likely to be "dominated by pension schemes that have already taken steps to de-risk (and so did not suffer the equity falls during 2008) and pension schemes whose sponsoring employer has become insolvent."

Shackleton predicts that several larger traditional buy-in deals will be completed during the remainder of 2009.

- Pensions Age August 2009

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