2021 pension buyout and buyout volumes topped £27.7bn


Total pension buy-in and surrender volumes totaled £27.7bn in 2021, according to the Hymans Robertson report.

The half-year risk transfer report showed that £20.9 billion of pension scheme liabilities were covered by buy-ins and buy-ins in 97 transactions in the half-year to December 31, 2021.

It turned out to be the third highest year on record, according to Hymans Robertson. The £27.7bn followed a total of £31.4bn for 2020, of which £18.8bn was covered in the second half; and a total of £43.8bn in 2019, of which £26.3bn hedged in H2.

The top three out of eight vendors during the year by value of deals underwritten were Aviva, which took the largest market share with 22% in total value; closely followed by Standard Life with 20%; and Legal & General with 19%.

According to the consultant, with market demand still high, pension plans need to carefully plan how they approach insurance companies for buyout and buyout quotes and demonstrate why they should be a high priority case.

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The consultant also noted that there had been four significant longevity swaps carried out in 2021, covering £15.2bn of liabilities.

A swap was entered into in the second half of 2021, which was a £2.6 billion transaction between MetLife and an undisclosed pension scheme, using Zurich as an intermediary.

James Mullins, Head of Risk Transfer at Hymans Robertson, said: “The impact of the pandemic continued to influence early 2021, but increased innovation in longevity hedging has led to a second half loaded with total transactions ranked second highest. always at the same level for a period of six months.

He added: “With many insurers having been behind target in mid-2021, this has created particularly strong competition towards the second half of the year.

“The rapid growth in demand for pension schemes to insure their risks, together with improved pension scheme funding levels, attractive insurer pricing and new alternative risk transfer options, means that we expect approximately £50bn a year of average redemptions and purchases over the next 10 years, plus longevity swaps.

“This means that, by the end of 2031, £1 trillion of pension scheme liabilities will have been insured, covering the benefits of 5 million members.”

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