Longevity risk swaps have been by far the most common practice, with $85.4 billion of pension assets being insured. In the plainest terms, the swap protects plans from its participants outliving the actuarial assumptions used to calculate plan liabilities. The most recent example was British utility Manweb Group entering a $1.3 billion swap with Abbey Life Assurance Co.
Pension risk transfer trends
Buyouts, where the plan transfers the liability to an annuity company, was the next most prevalent practice among observed plans with $63 billion in liabilities risk being transferred away from the sponsor. Plans use the buy-in option, where the plan sponsor purchases an annuity to cover disbursements, for $21.7 billion in assets.
Lump-sum distributions, where the plan offers to pay out the participant the present value of their benefits, only represented $13.1 billion of the assets observed.