Bulk annuity transactions set to hit record levels in 2022
The UK market for bulk annuity transactions is on track to hit record levels this year, pensions experts have said.
The value of all UK bulk purchase annuities deals is already up by 50 per cent compared to last year, and could hit historic levels by the end of the year.
The increase in the value of pensions buy-in and buy-out deals saw the value of all bulk annuity transactions jump from £8bn in the first half of 2021 to £12bn in the first six months of 2022.
“2022 has the potential to close with the highest annual volume transacted in the history of this market,” EY Parthenon’s head of pension risk transfer Leah Evans said.
Bulk annuity policies let pensions trusts de-risk their pensions schemes by passing responsibility for any payments to an insurer.
The jump in the value of UK bulk annuity transactions comes as “favourable market conditions” have seen insurers invest heavily in their bulk annuity offerings.
“In 2022 we have seen continued high levels of investment by insurers in the bulk annuity market,” EY’s bulk annuity consulting lead Chris Anderson said.
The bulk annuity expert warned that improved solvency ratios across the insurance sector mean “capital is no longer the primary constraint on values”.
“Instead, the main issue now is how many quotes and transactions insurers can operationally support,” Anderson said.