WTW’s annual Pensions De-risking Report said the UK defined benefit pensions market is likely to see £80 billion in pension “de-risking” transactions take place in 2024 as the settlement market “continues to hot up following significant improvements in pension scheme funding seen in 2023.”

The report said insurers are primed to buy out £60 billion in bulk annuity transactions and £20 billion in longevity swaps this year, making 2024 “the biggest year on record for pensions de-risking.”

WTW said last year saw historically high numbers of pension schemes securing their liabilities through an insurance led buyout, with over £50 billion written in bulk annuity transactions alone.

WTW expects this trend to increase, with many schemes having already changed their investment strategies to lock in favourable funding positions throughout the year and many also preparing their data in order to approach the insurance market this year.

Jenny Neale, director in WTW’s Pensions Transactions team, said: “It’s clear that funding improvements have turbo-charged the pensions de-risking market and, from a capacity perspective, we have already seen that the insurance market is capable of scaling up to meet demand.

“The attractiveness of these opportunities is also enticing new insurers to enter the market adding additional capacity, which we believe will be sufficient to meet requirements in the year to come …

“Despite the increased demand for de-risking, the Chancellor’s proposed Mansion House Reforms could give pause for thought for some pension schemes and their sponsoring employers.

“Whilst we expect buyout to be the long term destination for the majority of our clients, we have seen a number of schemes with strong sponsors initiating a fresh review of their long-term target and more schemes may choose to seek value in running on their pension scheme and delaying their move to buyout if a change in legislation allows easier use of any surplus run by the scheme.

“If this is the case, it’s unlikely that these schemes would wish to run unrewarded risks and consequently could look to hedge their demographic risks through the use of longevity swaps.”