There were 14 pension buy-in and buy-out deals worth over £100m completed last year, the most since 2008, according to figures published by LCP today.
The consultancy's Pension buy-ins, buy-outs and longevity swaps 2013 report details nine major transactions where a pension scheme purchased a bulk annuity from an insurance company to match part of the pension plan's liabilities - a buy-in.
There were also five deals completed worth over £100m which involve the insurance company taking over full responsibility for providing the pension plan - known as a buy-out.
The total of 14 deals was higher than the 12 recorded in 2011 and the 10 completed in both 2009 and 2010.
However, LCP noted that the total value of buy-in and buy-out deals worth £100m or more completed last year was £4.4bn, down on the £5.2bn recorded in 2011.
Last's years major buy-in transactions were worth a total of £2.48bn - compared to £2.15bn for the eight worth over £100m which were completed in 2011. The buy-outs completed last year were worth £1.92bn, significantly down on the £3.07bn combined value of the four major buy-in deals finalised in 2011.
Clive Wellsteed, a partner at LCP, noted that 2012's risk transfer deals were notable for two main reasons. 'For the first time, buy-in pricing for schemes holding gilts was favourable for the entire year,' he said.
'It also saw an interestingly diverse range of companies - from sugars to cars to fund managers - use buy-ins to manage their pension risk.'
According to LCP, buy-in and buy-out volumes could double from last year's levels to over £10bn as pension schemes continue to take advantage of record high gilt values and strong price competition among insurers.
But it noted that a material rise in gilt yields could significantly increase demand for risk transfer deals as pension schemes' funding positions improve. This would lead to a 'capacity crunch' as a growing proportion of the £1,000bn-plus of private sector defined benefit pension liabilities chase buy-in and buy-out capacity of closer to £10bn a year.
Wellsteed added: 'Time will tell whether the eventual unwinding of quantitative easing will help to fix pension deficits. But, until then, pension schemes completing a pensioner buy-in can move the pension risk dial down a notch and take advantage of current competitive pricing.'
