Micro schemes see 60% growth in pension risk transfers
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Schemes of less than £10m saw the biggest increase in the number of buy-ins and buyouts last year, contributing to a record 298 total deals worth a combined £47.8bn, new analysis of pension risk transfer activity has found.
The analysis by consulting firm LCP is based on final reported results for 2024 by the 10 – now 11 with this week's entry of Blumont Annuity – insurers in the pension risk transfer market, and include Rothesay’s results released on Thursday.
It finds that 2024 volumes came close to the £49.1bn written in 2023 and also saw £800m of superfund transfers and £800m in longevity swaps.
“The pension risk transfer market is firing on all cylinders, with record levels of competition and choice for schemes of all shapes and sizes, said LCP partner Charlie Finch.
There was an increase in the number of total transactions of 30%, with the biggest growth segment being schemes with less than £10m. For these, LCP recorded a nearly 60% year-on-year increase in transaction numbers, making up over 30% of 2024 transactions.
Schemes of less than £100m made up nearly 80% of all transactions last year, up from 70%, with nine of 10 insurers doing deals in this segment. Those with the most small-scheme transactions are Just Group (120) and Aviva (52).
LCP partly attributes the higher number of small schemes being insured to increased use of streamlined processes among insurers, which complement existing adviser-led streamlined services.
“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,” said 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,” she observed.
For insurers, those focussing on large transactions had the highest volumes, as Rothesay took a 22% market share with £10.3bn in transactions, while Legal & General had an 18% share thanks to £8.4bn in volumes. Pension Insurance Corporation was third at 17% market share and £8.1bn. Aviva, Just and Standard Life each had about 11% market share, as more than £5bn was transacted with each last year.
PIC, Aviva and Just won more market share compared with 2023, as did Canada Life and M&G. Source: LCP A record 14 deals worth more than £1bn were done in 2024, including the largest, two buy-ins for NatWest with Rothesay of more than £10bn combined. Large buy-ins and buyouts also included G4S, Compass and TotalEnergies.
Rachel Cutts, director pension risk transfer at L&G said: "Insurers have clearly stepped up to meet the increased demand that we have seen over the past few years. That business was spread across insurers as it was in 2024 is a real testament to the strength and vitality of the pension buyout market."
