Analysis by Lane Clark & Peacock (LCP) shows that 2024 was another strong year for the UK pension risk transfer market, with a record-breaking 298 buy-ins / outs totalling £47.8bn plus £0.8bn of superfund transfers and £0.8bn of longevity swaps.
For the first time, six insurers wrote over £5bn each and, with Blumont’s entrance this month taking the market to a record 11 insurers, competition has reached its highest level.
LCP’s analysis is based on the insurers’ final reported results for 2024 and the key finding is that buy-in and buy-out volumes for 2024 were the second highest on record at £47.8bn, only just short of 2023’s record-breaking year of £49.1bn.
This was driven by a record number of large transactions with 14 buy-ins / outs over £1bn occurring in 2024, beating the previous record of 12 set in 2023. This included household names such as Compass, G4S, and TotalEnergies.
The largest deal, by far, was by the NatWest Group Pension Fund, which secured £9.6bn with Rothesay over two transactions in 2024 (£3.5bn in H1 and £6.1bn in H2). Together with £0.6bn with Rothesay in 2023, NatWest has insured just over £10bn to date; the largest volume of any UK pension scheme and narrowly ahead of the previous record set by the ICI Pension Fund (£10.0bn to date).
Last year (2024) also saw a record-breaking number of transactions, with 298 completing in 2024, an increase of over 30% on last year’s number (2023: 227). The biggest growth segment was ‘micro’ sub-£10m schemes which saw a nearly 60% year-on-year increase in transaction numbers, making up over 30% of 2024 transactions.
More widely, smaller schemes of less than £100m made up nearly 80% of all transactions in 2024 (2023: c70%). Nine out of 10 insurers completed transactions in this segment, with Just (120 transactions) and Aviva (52 transactions) completing the most under £100m.
Rothesay wrote the largest volumes in 2024 at £10.3bn (22% market share), driven by its deals with NatWest, followed by L&G on £8.4bn (18% market share) and PIC on £8.1bn (17% market share). Aviva, Just and Standard Life also each wrote over £5bn of buy-ins / outs in 2024 (11%+ market shares).
Last year (2024) was the most competitive year ever for the buy-in / out market. A record 10 insurers completed transactions, with six insurers writing over £5bn each (2023: five insurers). Brookfield announced in March that its new UK insurer, Blumont, had received regulatory approval and is now participating in transactions. Other recent new entrant insurers, M&G, Royal London and Utmost, continue to build their presence, writing £1.5bn between them in 2024.
The expansion of the superfund market is also offering schemes greater choice. The transfer in December by the Wates Pension Fund of its £210m scheme to Clara-Pensions was the first superfund transfer of a scheme with a non-distressed sponsor, opening the option to a wider range of schemes.
Longevity swaps are also seeing increased activity with BT Pension Scheme’s announcement recently of £10bn of hedging. This followed a quiet year in 2024 with only two longevity swaps totalling £0.8bn.
“The pension risk transfer market is firing on all cylinders, with record levels of competition and choice for schemes of all shapes and sizes. This can be seen by schemes such as NatWest which has completed over £10bn of buy-ins in the last 18 months, right down to the 60% year-on-year growth in transactions by ‘micro’ sub-£10m schemes,” said Charlie Finch, Partner at LCP.
“Transfers to Clara-Pensions last year have opened up superfunds as a viable option for a wider range of schemes. And in coming months, the Government is due to publish further details on the shake-up of the rules around surplus release which should increase flexibility for schemes to run-on,” Finch added.
“Looking ahead, we’re seeing a continued focus from insurers with high levels of competition for transactions of all sizes. It is particularly pleasing to see insurers responding to the rapid growth in demand for smaller schemes transactions, and new entrant insurers increasing competition for this market segment resulting in favourable pricing for well-run processes,” added Imogen Cothay, Partner at LCP.
“We’re also seeing continued innovation driving improvements in other aspects of insurers’ offerings, as pension schemes increasingly look to non-price factors such as the member experience to drive their insurer selection decisions. Whilst larger schemes are leading the way, key innovations developed on the £1bn+ deals we led last year are now being made available to smaller schemes,” said Cothay.