On the go: Risk transfer momentum is on the rise, driven by strong investment return, market activity, asset availability and the number of large pension plans coming to the market, new research has shown.
The Legal & General Global Pension Risk Transfer Monitor, published on February 8, reported an increase in large volume transactions in 2021 with ‘historical’ results in the second quarter.
According to the research, the bulk annuity market in the UK reached £30bn in 2021, with £22bn accumulated in the second half of the year alone, a market record.
The boom in demand was catalysed by defined benefit pension scheme funding levels, and aggressive longevity reinsurance pricing, in addition to a drive in strong investment return and rising interest rates, L&G stated.
The projected growth is expected to continue in 2022, with the insurer anticipating the market’s appetite for large volume transactions to prevail, as seen in the excess of £1bn transactions witnessed in 2019.
Multiple factors including market activity, asset availability and the volume of large pension plans available to come to market will all contribute to the positive estimates, L&G said. .
Chris DeMarco, managing director UK pension risk transfer at Legal & General Retirement Institutional, said: “Last year, was another busy year for the UK [pension risk transfer] market, and we expect activity to accelerate in the years ahead.
“We believe the market will go from strength to strength as more schemes move closer to their endgame and full buyout, with new innovations bringing increased flexibility and affordability.”
