'Record-breaking' six months for the UK PRT market in H1 2024

Written by Paige Perrin

18/10/2024

The first half of 2024 was a "record-breaking" period in the UK pension risk transfer market, which saw an "unprecedented" number (134) of buy-ins with an overall value of £15.2bn, Hymans Robertson has found.

This is the highest number of transactions ever recorded in a six-month period, with a “flurry” of transactions since the middle of the year meaning that the market has seen 600 pension scheme buy-ins completed since the start of 2022.

In addition to this, more than 250 buy-ins are expected to transact over the whole of 2024, a record number in a calendar year.

When compared to the second half of 2023, where larger deals dominated the market, the first half of 2024 saw smaller and medium transactions as the central point.

Meanwhile, this period also saw the UK’s second-ever superfund transaction with Clara Pensions, securing the liabilities of the £600m Debenhams Retirement Scheme and Rothesay’s £6bn acquisition of the Scottish Widows buy-in portfolio in March 2024.

Commenting on the findings, Hymans Robertson partner and head of risk transfer, James Mullins, said: “2024 is shaping up to be another fascinating year for the risk transfer market.

“Insurers have demonstrated that they can handle record buy-in transaction numbers.

“The question now is how well the insurers will be able to cope with transitioning all the buy-in into buyouts.

“Indeed, it’s incredible that around 500 whole-scheme buy-ins have completed since the start of 2022.”

Mullins explained that most of those will be now looking to transition to buyout and then the remaining “empty pension scheme” will be wound up.

“That's a lot of pension schemes looking to transition from buy-in to buyout and then wind up,” he continued.

“And that trend is set to continue as many pension schemes can afford to fully insure and look to move to buyout.

“This could create an administration bottleneck, so trustees need to carefully test their chosen insurance company’s capacity for ongoing administration and the transition to buyout.”

In addition to this, he said the firm’s report said the remainder of 2024 looked like it would continue “a similar trajectory with plenty more large transactions expected over the coming months and into 2025”.

“There is a wider range of options for de-risking than ever before with a record eleven insurers now in the marketplace,” he added.

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