The bulk annuity market is expected to remain “firm”, with total deals in 2021 expected to hit around £30bn, in line with 2020's result, according to a report from Bloomberg Intelligence (BI).

The report, Pension Offloading Is Driving Up Bulk Annuity Market, argued that greater regulatory intervention to seek higher funding may be increasing the pressure on companies to find solutions for their defined benefit schemes.

Alongside this, BI has highlighted previous research from Hymans Robertson, which found that competitive pricing is fuelling demand, warning that this is likely to have exceeded supply.

In contrast, however, the report also found that easing UK life expectancy was expected to hit bulk annuity pricing as longevity risks ease, noting that economic uncertainty may help credit spreads to widen and increase risk-free yield perfect conditions.

BI senior industry analyst, Kevin Ryan, commented: “Companies with large defined benefit pension plans are outsourcing their liabilities for more financial flexibility driving up the number and value of pension risk transfer deals."

Despite the impact of the pandemic, industry estimations have previously placed the total value of buy-in and buyout deals in 2020 at around £31.7bn, which, BI emphasised, whilst lower than the record £43.8bn seen in 2019, was still “well ahead” of level of activity seen in 2018.

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