Almost half of U.K. defined benefit fund trustees are now targeting a buyout as their long-term objective, finds research by Hymans Robertson.
A survey of 100 pension fund trustees found that 49% are now aiming for a buyout, up from 15% four years ago, the consultant said. The proportion targeting self-sufficiency in their pension funds fell to 37% from 81% four years ago. The remaining 14% of trustees are looking at some form of consolidation as the long-term objective.
The consultant's half-year risk transfer report also found that £25 billion ($32.3 billion) of pension fund risk was insured in the first six months of 2020 and 40% of FTSE 100 firms with DB funds have now completed some type of pension risk transfer.
"This growing demand from pension schemes means that, even with the additional challenges posed by COVID-19, we expect the total number of buy-ins and buyouts in 2020 to increase from the 153 transactions seen in 2019," said James Mullins, head of risk transfer solutions at Hymans Robertson, in a news release accompanying the report.
However, the firm expects the average transaction size to be lower than the £286 million recorded in 2019, so Hymans Robertson forecasts a £30 billion in total pension risk transfer deals this year compared with £43.8 billion last year.
The report is available for download on Hymans Robertson's website.