Last year marked a record year for the UK’s pension risk transfer (PRT) market, with an estimated £50bn (€59bn) worth of transactions completed, including buy-ins, buyouts, and longevity swaps.

The total was almost double that of the previous year, according to Mercer, which compiled the figures, and there were several innovative approaches to buy-ins and buyouts as demand from pension funds and competition among insurers reached new highs.

Communications company Telent conducted the biggest single deal of the year, agreeing a full buy-in of its GEC 1972 Pension Plan with Rothesay Life worth £4.7bn. The agreement will subsequently be converted into a buyout, with individual annuities issued to the scheme’s approximately 39,000 members, making it the biggest buyout in the UK to date.

Publicised transactions ranged in size from 3i’s £95m deal with Legal & General (L&G) to the £4.7bn Telent buy-in, although consultants say a number of smaller transactions were also completed, including some sub-£10m arrangements. Some consultants have introduced streamlined processes for small schemes seeking a buy-in or buyout, simplifying the process for trustees and reducing the amount of time insurers have to spend analysing deals.

Larger schemes have been de-risking in tranches, selecting different insurers for various buy-ins as a way of obtaining the best price and diversifying insurance risk. Marks & Spencer and National Grid both took this approach in 2019.

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