Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • Sections
  • News

Pension longevity risk transfers hit record high

Open-access content Friday 19th March 2021
Pension longevity risk transfers hit record high

UK pension schemes completed a record £55.8bn of longevity risk transfers with insurers last year, up from the previous high of £51.6bn set in 2019.

That is according to analysis by consultancy firm Lane Clark & Peacock (LCP), which explained how the “exceptional pricing” in 2020 was driven by COVID-19 and fall in the value of assets used by insurers to back their pricing.

Total buy-in and buyout volumes reached £31.7bn, down from the record £43.8bn set in 2019, but significantly higher than in previous years.

Longevity swaps reached £24.1bn, the largest total ever, ahead of the £21.9bn recorded in 2014, which was the next highest year.

“At the start of last year before the COVID-19 pandemic took hold, we predicted that buy-in and buyout volumes would top £25bn in 2020,” said Imogen Cothay, partner at LCP. “It’s a mark of the resilience of the pensions de-risking market that volumes surpassed our expectations topping out over £30bn.”

The analysis is based on insurers’ final reported results for 2020, including the Pension Insurance Corporation’s (PIC’s) results. 

Legal & General (L&G) had the highest market share of the buy-in and buyout market on 24%, closely followed by Rothesay on 22%, and Aviva and PIC, both on 19%.

The largest single buy-in or buyout was an unnamed £3.3bn buy-in completed by Rothesay in December, while the £2bn buyout for the Old British Steel Pension Scheme with PIC was the second largest.

There were only two buy-ins or buyouts worth over £2bn, compared to six in the previous year, but at least 60 valued between £100m and £1bn, representing a 67% increase on the 36 recorded in 2019.

Last year also saw six longevity swaps announced by UK schemes totalling £24.1bn, up from two totalling £7.8bn in 2019.

Looking forward to this year, Charlie Finch, partner at LCP, said: “2021 has begun with welcome news for many pension schemes in the form of a surge in gilt yields boosting funding levels and giving extra capacity to de-risk. 

“Combined with a strong desire from trustees and sponsors to lock down their risks, this is likely to lead to sustained volumes of longevity risk transfer over the next year.”

 

Image credit: iStock

Author: Chris Seekings

You may also be interested in...

TPR opens consultation on new code of practice

TPR opens consultation on new code of practice

The Pensions Regulator (TPR) has today opened a consultation on plans to create a single code of practice that is clearer and more accessible than existing guidelines.
Wednesday 17th March 2021
Open-access content
Pension funds kept in the dark on voting information

Pension funds kept in the dark on voting information

Asset managers are keeping UK pension funds in the dark on how they exercise their voting rights and engage with the companies they invest in, a study by Dalriada Trustees has found.
Tuesday 16th March 2021
Open-access content
Pension schemes could be overestimating liabilities by 3.5%

Pension schemes could be overestimating liabilities by 3.5%

UK pension schemes could be overestimating their liabilities by up to 3.5% as a result of their failure to consider the long-term impacts of COVID-19, research by the XPS Pensions Group suggests.
Monday 22nd March 2021
Open-access content
Canada tops global ranking for pension transparency

Canada tops global ranking for pension transparency

Canada has topped a ranking of 15 countries for the transparency of its pension scheme disclosures, with the UK in sixth position.
Monday 15th March 2021
Open-access content
web_pension-schemes-set-to-use-contingency-finding_iStock-171275973.png

Three-quarters of UK pension schemes set to use contingency funding

Three in four defined benefit (DB) pension schemes in the UK are set to use contingency funding to manage their risks amid significant changes to the economic and regulatory environment.
Friday 26th March 2021
Open-access content
CMI model shows modest fall in life expectancy

CMI model shows modest fall in life expectancy

he Continuous Mortality Investigation's (CMI) latest model shows that the UK's 65-year-olds have experienced a modest fall in life expectancy following the outbreak of COVID-19.
Tuesday 9th March 2021
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from News

web_Kartina-Tahir-Thomson.jpg

IFoA appoints new president-elect

The IFoA's next president-elect is to be Kartina Tahir Thomson, it was announced today (29 March 2023).
Wednesday 29th March 2023
Open-access content
tf

New online forum 'IFoA communities' – now live

IFoA communities is your new online digital community. Here’s how to get started on the platform
Thursday 2nd March 2023
Open-access content
uh

Climate risk course sees new growth

In April, the Climate Risk and Sustainability course will be one year old. During its first year, we welcomed 155 participants and awarded 148 certificates. Members from more than 19 countries came together at the seminars to discuss and share what they had learnt.
Wednesday 1st March 2023
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Shape the Future of Insurance

London (Central)
£ excellent package
Reference
149090

Senior Pricing Actuary - Life Reinsurance

London (Central)
£ excellent
Reference
149089

Insurance Investment Leadership Opportunities

Flexible / hybrid with 2 days p/w office-based
£ dependent upon experience
Reference
149088
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ