UK - Pension schemes are expected to shift a further £20bn ($32bn) of liabilities to insurance companies and banks over the next 18 months, according to Hymans Robertson.
The consultant's Managing Pension Scheme Risk Report Q1, revealed schemes have passed about £30bn of liabilities to insurers and banks since 2006/07 - a figure which should hit £50bn before the end of 2012.
It said last year was the third successive year during which £8bn of scheme risk was transferred via buy-ins, buy-outs and longevity swap deals and this year would see a substantial increase above these levels.
Hymans Robertson also predicted Q2 to set a new record in terms of the number of buy-in and buyout deals completed as the pipeline for new risk transfer deals is at the highest level since before credit crisis, with several multi-billion pound buy-in deals currently testing the market.
During Q1, £350m of risk transfer deals were completed, comprising buy-ins, buy-outs and longevity swaps, compared to about £1.6bn in Q4 last year.
Elsewhere, Hymans Robertson predicted a surge in longevity swaps in the next six months, as several potentially significant longevity swap deals have reached exclusivity stage.
Hymans Robertson partner and head of buyout solutions James Mullins (pictured) said: "There are several multi-billion pound buy-ins and longevity swaps currently being tendered and expected to complete during 2011. Furthermore, many providers acknowledge that they are currently devoting serious resource to around 20 similar projects for some of the UK's largest pension schemes."
Indeed, Hymans Robertson predicted one-in-four FTSE100 companies to complete a material pension scheme risk transfer deal before the end of 2012 because of improved market conditions and innovative strategies.
The year to 31 March saw £4.5bn of risk transfer deals, the vast majority of which related to buy-ins. The market for buy-in/buy-outs during the year was dominated by Rothesay Life - who had more than 30% of market share by value - Aviva, Prudential, Pension Insurance Corporation, Legal & General, MetLife and Lucida.
In addition, enhanced buy-ins, which make use of impaired life annuities, are ballooning in popularity given their ability to significantly reduce the buy-in cost for many UK pension schemes, Hymans Robertson said.
Mullins added: "There is a snowball effect here: the more schemes that tackle risk, the more pressure there is on others to follow suit. The raft of final salary closures over the last two years, and the impending restrictions on tax relief for high earners' pension contributions, are raising serious questions for companies over the merits of continuing to run significant risk within their DB pension schemes."
The Pensions Regulator (TPR) is focusing on reducing the number of "poorly-run" schemes as it seeks to improve standards across the board.
Prudential Retirement has completed around $2.6bn (£2bn) of reinsurance contracts for UK pension scheme longevity risk since the start of the year, it has disclosed.
Funding standards for DB schemes have increased exponentially over the past decades. Con Keating says such significant overstatement of liabilities will lead to pushback through the courts.
PP has compiled a list of what to watch out for over the coming months.