The Covid crisis has not had a significant impact on the risk transfer market, which has remained buoyant during the first half of this year, with significant transactions being completed, according to the latest data from Mercer.
It says there remains good opportunities for schemes of all sizes looking to pursue this path.
Its mid-year market update says that despite market uncertainty created by the coronavirus pandemic transaction flows remain strong, with over £12bn of bulk annuities written in the first six months of 2020.
Mercer is forecasting around £20bn to £25bn of bulk annuity transactions over the full year.
In addition to these bulk annuity purchases there have been around £12bn of longevity swap transactions in the UK to date, including the £1.4bn UBS swap led by Mercer.
Mercer forecasts around £15bn to £20bn of longevity swap transactions for the year.
In total Mercer says it helped clients complete 20 transactions in the first half of 2020, with many of these undertaken during the lockdown period. This included a £650m buy-in for 3i.
Mercer points out that the pension risk transfer market has seen a “tremendous increase in activity” over the past three years, culminating in a record breaking 2019. Many predicted that this may be derailed by economic uncertainties but to date this does not seem to be the case.
This year has also seen schemes taking up new innovations – such as the Assured Payment Policy purchased by the Allied Irish Bank Pension Scheme, in a £1.1bn de-risking transaction led by Mercer.
Mercer says it is also now using artificial intelligence data techniques to optimise member option offer structures.
It adds that the second quarter of the year saw window of opportunity for some schemes who had prepared to take advantage of favourable market conditions. This included options for smaller schemes – some which had just £5m of assets.
For schemes looking at risk transfer options Mercer has launched a series of videos alongside the Risk Transfer Market Watch.