Recent analysis by Hymans Robertson shows that £1trn (€1.13trn) of risk from defined benefit (DB) pension schemes is expected to have been insured by the end of 2031.

The analysis showed that since the pension risk transfer market took off in 2007, buy-ins/buy-outs (£180bn) and longevity swaps (£110bn) have already insured £300bn of risk from DB pension schemes.

Further analysis by the consultancy points to an additional £700bn of DB pension scheme risk being insured by the end of 2031, resulting in a total of £1trn by then.

Despite a global pandemic, the total value of risk transfer transactions for 2020 was around £30bn – the second biggest year for the bulk annuity market.

“Looking forward, 2021 is unsurprisingly set to be another busy year. It’s now more important than ever to be transaction-ready if you want insurers to view your pension scheme as a high priority case in 2021 and beyond,” the report said.

James Mullins, head of risk transfer at Hymans Robertson, said: “£1trn of insurance would be equivalent to around half of the value of all Gilts currently issued by the UK government or around half the value of all of the companies in the FTSE 100. Indeed, with the level of growth in pension scheme buy-ins and buy-outs that we are projecting, we can expect to see several insurance companies become some of the largest companies in the FTSE 100 over the next 10 years.”

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