Longevity risk transfers by UK pension schemes reached a record level of £55.8bn in 2020, rising above the £51.6bn completed the year before, analysis from LCP and Mercer has shown.

Total buy-in and buyout volumes were £31.7bn, the second largest ever recorded in a single year but behind the £43.8bn bumper volumes racked up in 2019, with the record-breaking year instead being driven by longevity swaps reaching £24.1bn.

Legal & General (L&G) had a 24 per cent market share, followed by Rothesay with 22 per cent, Aviva with 19 per cent and Pension Insurance Corporation (PIC) on 19 per cent.

The year’s largest single buy-in or buyout transaction was an unnamed £3.3bn buy-in completed by Rothesay in December, with PIC’s £2bn Old British Steel Pension Scheme buyout coming in second.

Analysts at LCP commented that mid-size transactions surged during the year, with a 67 per cent increase in transactions between £100m and £1bn in size.

Additionally, Mercer pointed out that over half of 2020’s deals (77 deals) were below £100m in volume, of which 21 were below £10m.

Meanwhile, the year saw six longevity swaps announced by UK schemes totalling £24.1bn, compared to two totalling £7.8bn in the prior year, with the £10bn swap between Lloyds Banking Group Pensions Trustees Limited and Pacific Life Re coming in as the second largest transaction of this type ever completed.

There were also two conversions of longevity swaps to buy-ins over the year, by the MNOPF and the LV= scheme, taking the total number of conversions to eight.

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

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