The UK pension risk transfer market could reach up to £60bn in 2021 through bulk annuities, longevity swaps and new risk transfer solutions, according to forecasts from Mercer.

The firm has predicted continued growth in risk transfers during 2021, stating that increased activity will likely be driven by an increase in demand and innovative and streamlined processes, and could lead to the “busiest year on record”.

In particular, it predicted that there would be better affordability as more schemes mature, increased demand from schemes and sponsors following the pandemic, and innovation to meet the challenges faced by defined benefit (DB) schemes.

Mercer UK head of risk transfer and DB journey planning, Andrew Ward, commented: “We predict that 2021 will be the busiest year on record with the return of ‘mega’ buy-in and buyout deals and longevity swaps.

“Given the growing range of risk transfer solutions available to trustees and sponsors, it is more important than ever that advisers provide clear guidance to help them identify the right path to achieve the best outcomes for all stakeholders.”

Ward emphasised that despite the pandemic, 2020 is also “within touching distance” of being the busiest ever for risk transfer to insurers and reinsurers, with roughly £50bn of transactions, including £30bn of bulk annuities.

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