UK. Pension risk settlement market set to pass £45bn by end of 2021
The UK pension risk settlement market is expected to exceed £45bn by the end of 2021, representing the third year in a row that activity has reached this level, according to analysis from Aon.
The firm explained that whilst the market was “relatively subdued” in the first half of 2021, with £7.7bn of bulk annuity deals completed, the pace has since accelerated.
As a result, Aon predicted that there will be close to £30bn of bulk annuity deals completed by the end of the year, estimating that volumes from July to December will amount to over £20bn, making it the second-busiest six-month period after the £26.3bn recorded in H2 2019.
The provider also suggested that it has been a busy 12 months for the longevity swap market, with disclosed transactions in 2021 expected to surpass £15bn.
Aon associate partner, Tom Scott, noted that, as in previous years, the swap market has continued to be dominated by a relatively small number of ‘mega deals’, explaining that this can make the market appear quite between the announcement of transactions.
“The reality could not be further from that,” he clarified, “there is currently significant behind-the-scenes activity ahead of the completion of the next wave of transactions.”
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