The second half of 2024 was record-breaking for both the total value and number of deals transacted in the DB pension scheme risk transfer market, says Hymans Robertson, as it releases its latest report today. 165 deals transacted from 1 July to 31 December 2024, with a total value of £32.6bn. This beats the previous record set during the second half of 2023, where the total value of deals completed was £28bn. In 2024 as a whole, 299 deals transacted, with a total value of £47.8bn.
Large DB schemes continue to dominate the risk transfer market, according to the leading pensions and financial services consultancy, although it is seeing the small scheme market continue to grow. In the second half of 2024, six insurers completed 12 buy-in transactions in excess of £1bn each, totalling over £20bn. These 12 deals made up almost two-thirds (65%) of the bulk annuity transactions over the six-month period.
2024 was an innovative year for the risk transfer market. It saw M&G complete its first “value-share” bulk purchase annuity transaction, and Clara-Pensions secure two transactions, growing its effort to operate as a ‘bridge to buy-out’.
Commenting on the findings from the H2 2024 report, Lara Desay, Head of Risk Transfer, Hymans Robertson, says: “As expected, 2024 was another record-breaking period for the risk transfer market. The volume of transactions has helped to drive innovation across the market, with new entrants Royal London and Utmost increasing competition. Small schemes have capitalised on their improved funding levels throughout this year, helping to secure benefits with insurers, as competition continues to grow in this area of the market.
“To help meet the increased demand across the board, insurers have continually strived to streamline their processes and make the buy-in journey more efficient. We expect innovation to grow throughout the risk transfer market as the sector continues to expand. However, there are areas to watch, and challenges to consider.
“Many of the schemes that have bought-in are expecting to move to buy-out in the coming years, potentially causing a bottleneck. Insurers need to invest in their post-transaction operations to effectively manage this demand. Trustees should carefully review each insurer’s administration, and transition processes, prior to starting their own buy-out journey.
“Looking ahead, we expect the high number and value of buy-ins in 2024 to be the new norm. The influx of new entrants should enhance competition and help meet the growing demand with the number of insurers in the market hitting an all-time high.
“The risk transfer market will continue to go from strength to strength providing excellent opportunities for pension schemes in 2025 and beyond.”
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