The UK bulk annuity market will experience a bumper year in 2018, according to risk management firm Aon, with transactions predicted to reach £30bn for the first time.
It is also expected that deals in 2017 will exceed £10bn for the fourth year in a row, despite not one single transaction being worth more than a billion.
This is thought to reflect an increase in the core growth of the market, although a series of 'mega-deals' are expected next year, with a strong pipeline of £1bn transactions already in place.
Aon risk settlement team partner, John Baines, said the increase in market activity is being driven by improving financial positions of pension schemes resulting in an increased focus on de-risking for trustees and sponsors.
"In particular, we have seen an increase in sponsors using bulk annuities to make a clear statement to shareholders that pension risk is under control," he added.
Baines went on to say that innovative investment strategies, greater competition, and changing longevity trends have seen the pricing of bulk annuities compared to other low-risk assets hit at a nine-year low.
Aon said that the expected rise in activity may mean that some schemes have to be patient, waiting for prime insurer appetite and financial conditions, before they look to de-risk.
"Given the good pricing available, the time looks to be ripe for pension schemes aiming to acquire a bulk annuity. However, schemes - now more than ever - need to be serious when they approach the market," Baines continued.
"They need to be able to align and articulate the strategies of all the key stakeholders - the trustees, sponsor and members, and be clear about which benefits they are insuring, and of the structure of deal from the outset.
"In the past, a speculative approach to test the market has been tolerated, but we expect such approaches to result in disappointment in 2018.
"Insurers are increasingly focusing their resources on those that are most likely to transact."