The pension risk transfer market is set for a year of “unprecedented change” in 2024, according to Hymans Robertson.

In its annual risk transfer report, the consultancy said it expected to see more insurers competing for bulk annuity deals, as well as a record multi-billion pound volume of transactions, and increased use of alternative risk transfer options and captive insurance options in 2024.

Hymans Robertson expected two new market entrants competing for buy-in deals by mid-2024 and some insurers changing ownership during the year.

The report forecast that buy-in volumes would exceed the £50bn of transactions in 2023 this year, with £50bn to be the ‘new normal’ for buy-in volumes until at least 2030.

Furthermore, the alternative risk transfer market will “come of age” in 2024, as more superfund transactions are completed and a broader range of established options are available to pension schemes.

These market conditions represent “excellent” opportunities for well-prepared schemes of all sizes due to increased competition at both ends of the market, according to the consultancy, with a greater variety of de-risking options helping solve different endgame objectives.

Commenting on the report, Hymans Robertson partner and head of risk transfer, James Mullins, said: “2024 is already shaping up to be a year of unprecedented change for the risk transfer market, which is presenting opportunities for well-prepared pension schemes.

“For example, we expect to see two new entrants competing for buy-in transactions by the middle of 2024. This will further increase competition for smaller and medium-sized pension schemes.

“In addition, there is an ‘early mover’ advantage for the first few pension schemes to transact with a new entrant in the buy-in market, as the insurer accepts a lower margin to help build up its credibility.

“At the larger, multi-billion pound end of the market, more insurers are demonstrating that they have the capability and appetite to complete record-breaking transaction sizes.

“Insurers also currently have access to a large amount of capital, which increases their capacity for transactions of all sizes. This gives the potential for all insurers to complete record transaction volumes during 2024.”

Mullins stated that if last year’s bulk annuity market was all about demand from pension scheme, then 2024 will be about increased supply from the insurers and alternative risk transfer providers.

“Existing and new insurers have geared up well for at least £50bn a year being the new normal for buy-in volumes,” he continued.

“Indeed, our projections indicate that buy-in volumes will be at least £50bn every year for the remainder of the decade.”

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