Defined benefit (DB) pension schemes offloaded a record slice of their liabilities in 2019, a report claims, and there could be much more to come.
The pension risk transfer market should have surpassed £40bn in 2019, Legal & General believes. If the financial services giant is right, then the de-risking market has growing eightfold since 2010.
Yet this growth rate is forecast to accelerate in the next decade as schemes move closer to their endgames, according to the Pensions Policy Institute. In a report published in October, the retirement savings research specialist predicted that the value of UK pension liabilities transferred to insurers could top £770bn by 2030.
The volume of such deals transacted in 2019 demonstrates the market’s potential, said Laura Mason, chief executive of Legal & General Retirement Institutional.
“It seems likely that the total volume of new business in the UK market will exceed £40bn in 2019, a fantastic result for trustees, companies and pension plan members alike,” she added.
The five largest transactions in the UK were each worth more than £3.4bn, the report said. Of the 10 largest such UK transactions overall, six were completed last year.
One example is telecommunications tech company Telent, which agreed a full buy-in of its pension plan with insurer Rothesay Life in October. The agreement between the two is worth £4.7bn.
The rising number of nine-figure deals is further evidence that the trend towards pension scheme de-risking is booming.
Indeed, it has been reported that mutual giant the Co-op is negotiating deals with Pensions Insurance Corporation and Aviva to offload up to £2bn of its pension liabilities.