The number of FTSE 100 defined benefit (DB) schemes at least 80% funded on a buyout basis almost doubled over 2016, according to Lane Clark & Peacock (LCP).
Around one in five were funded to at least this level at the end of December 2017, the consultancy said, up from one in eight at the end of 2016.
Meanwhile, on average, FTSE 100 schemes are 10 percentage points better funded on the same basis compared to August 2016, in the aftermath of the EU referendum vote, and at their highest level since the 2008 financial crisis.
The funding levels have been boosted by higher than expected mortality rates in 2017, with the average life expectancy for a 65-year-old man falling by nearly half a year, which reduced liabilities on average by 3%.
All this has led to a predicted bumper year for the bulk annuity market in 2018, with annual volumes expected to surge over £15bn and become a "new norm". LCP estimated more than £25bn of insurer capacity over this year, including buy-ins, buyouts and annuity backbook deals.
The consultancy's report, Pension de-risking steps up a gear (registration required), suggested this capacity would be up 25% compared to last year, during which around £12bn of bulk annuity deals are expected to be recorded.
Partner and report author Charlie Finch said schemes will need to be prompt to take advantage of hangover attractive 2017 pricing.
"Companies looking to reduce pensions risk are finding the best financial conditions to do so since the banking crisis," he said. "Prompt action will allow them to benefit from the current high level of competition between insurers.
"The improvements in affordability mean that many pension schemes can currently reduce risk through insurance. Some finance directors will conclude that now is the right time to write the cheque and transfer the scheme in full to an insurer. Even where that remains unaffordable, a partial transfer to an insurer through a buy-in is usually achievable at no cash cost."
With just 60% of insurer supply estimated to have been used last year, as well as additional competition with the entry of Phoenix Life to the market, LCP predicted there will be a 50% increase in liabilities being insured over the year.
Meanwhile insurers may be more selective about their deals, increasing the need for schemes to prepare before approaching an insurer.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.
The Baker Hughes (UK) Pension Plan has secured approximately £100m of liabilities through a buy-in with Just Group.
There have now been a total of 30 longevity swaps over £1bn publicly announced. The full list, provided by Willis Towers Watson and through PP research, is as follows...
The Reckitt Benckiser Pension Fund has secured a £415m buy-in with Scottish Widows, insuring the benefits of around half of pensioners.