Insurance broker Willis Towers Watson is anticipating roughly £30 billion in bulk annuity deals across 2021, closely matching this year’s expected total.
Furthermore, WTW expects to see £25 billion in longevity swaps across next year, close to the £24 billion racked up throughout 2020.
Overall, despite the challenges inflicted by the global pandemic, WTW analysts say 2020 may just beat 2019 as the biggest year ever in the longevity de-risking markets.
Looking forward towards 2021, there’s expected to be plenty of opportunities for all sizes of schemes.
In a landmark market development, 2021 is also expected to see the first deals for superfunds, following the Pension Regulator’s publication of its interim regulatory regime in mid-2020.
“The fact that the longevity de-risking market has hit the volumes we predicted in December 2019, despite all of the unanticipated head winds in 2020, is a testament to the strength of the market and the focus that trustees and sponsors have shown this year to do the right thing for members,” said Shelly Beard, Senior Director in WTW’s transactions team.
“A few years ago, many were predicting exponential growth in this market, whereas 2019 to 2021 will all have very similar new business volumes.
“This reflects general falls in scheme funding levels over 2020 as well as the many other priorities trustees have to focus on this year and next – most notably GMP equalisation.
“Looking beyond 2021 we expect the market to grow further. Our clients recognise that future prospects for longevity are more uncertain now than at perhaps any time in recent memory,” Beard added.
“This means that, where it is affordable to so, transferring risk to the insurance market is the prudent thing to do.
“The key thing for schemes going into 2021 with de-risking ambitions is to stay agile on the timing of any deal. It seems likely that 2021 will be another year of uncertainty and this may present opportunities for well prepared and flexible schemes.”
