The Legal & General Group has forecast pension risk transaction volumes to hit £30bn for last year, as the market maintains its momentum into 2022.
Britain’s oldest insurance group expects demand for pension risk transactions (PRTs) to remain strong this year, according to its latest Global PRT Monitor which analyses the market’s outlook across the UK and US.
Far surpassing the around £20bn the market reached in 2020, PRT volumes have been increasingly fuelled by so-called ‘jumbo transactions’ and strong investment returns and rising interest rates upping Defined Benefit plans.
In the UK alone, the monitor found the second half of the year to be one of the busiest six-month periods in the history of the market – with some £22bn of retirement income secured.
Competitive longevity reinsurance pricing has also bolstered the market, helping to attract pension savers amid a turbulent financial period during the pandemic, and spur on the market.
“We believe the market will go from strength to strength as more schemes move closer to their endgame and full buyout, with new innovations bringing increased flexibility and affordability,” the group’s managing director for PRT in the UK, Chris DeMarco said.
“The experience of the past two years has underlined the fundamental purpose of insurance: protecting the retirement income of members during one of the most uncertain periods in living memory
“Last year was another busy year for the UK PRT market, and we expect activity to accelerate in the years ahead.”