Pension bulk annuity deals totalled £27.7bn in 2021

The total value of buy-in and buyout deals in 2021 was £27.7bn, according to Hymans Robertsons’ Half Year Risk Transfer Report, with £20.9bn worth of transactions taking place in the second half of the year.

During the year, there were at least 39 deals in excess of £200m, including Assured Payment Policies, of which at least 14 were over £500m.

Aviva held the largest market share of buy-in and buyout transactions, with 22 per cent (£6.17bn), followed by Standard Life (20 per cent/£5.47bn), Legal & General (19 per cent/£5.32bn) and Pension Insurance Corporation (17 per cent/£4.7bn).

In 2021, the value of buy-ins was greater than the value of buyouts, with approximately £21.1bn of buy-ins completed compared to around £6.6bn of buyouts.

Around £15.2bn worth of longevity swaps were completed during the year.

This means that buy-ins, buyouts and longevity swaps have insured over £330bn of risk from defined benefit schemes over the past 15 years, as of 31 December 2021.

More than half (£180bn) of that amount has been transacted over the last four years.

Hymans Robertson predicted that, by 2031, around £1trn of pension scheme risk would have been insured or transferred to third parties.

Commenting on the report, Hymans Robertson head of risk transfer, James Mullins, said: “The impact of the pandemic continued to influence in early 2021, however increased innovation in the longevity hedging space, led to a busy second half of the year with total transactions at the second highest ever level for a six-month period.

“With many of the insurers having been behind target by mid-2021, this created particularly strong competition toward the second half of the year.

“The rapid growth in demand for pension schemes to insure their risks, along with improved pension scheme funding levels, attractive insurer pricing and new alternative risk transfer options, means that we expect around £50bn a year of buy-ins and buyouts on average over the next 10 years, in addition to longevity swaps.

“That means that, by the end of 2031, £1trn of pension scheme liabilities will have been insured, covering five million members’ benefits."

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