The fall in pricing of credit assets due to Covid-19 has made bulk annuities more affordable for schemes with significant gilt holdings, according to XPS Pensions.
The consultancy said there was "considerably downward pressure" on pricing among the eight insurers in the market due to the heightened volatility.
After last year's record-breaking £44bn of bulk annuity transactions however, this year's volumes could see a "small drop" due to there being fewer large schemes able to transact.
Head of risk transfer Harry Harper said: "Market volatility is rapidly altering the pricing of all assets and this includes the price of bulk annuities. For those schemes that are holding gilts, bulk annuities are now significantly more affordable than they were and, for those schemes holding equities, bulk annuities have become less affordable.
"A driving factor is the economic turmoil which has made the credit assets that insurers buy cheaper and, due to there being eight insurers in the market, there is considerable downward pressure on bulk annuity pricing. There has already been evidence of price cuts."
XPS said there was "no reason for delay" for schemes which are able to afford the insurance transactions, with pricing expected to reduce relative to the cost of meeting liabilities via gilts.
Last year, pensioner pricing was broadly equivalent to gilts plus 0.2% per annum, while deferred pricing was along the lines of gilts minus 0.5% per annum.
While market conditions may have put a dent in your de-risking plans, there is still plenty of preparation you can do and opportunities to take advantage of, says Michael Abramson.
Another £1.2bn of defined benefit (DB) scheme liabilities were insured by Just Group last year, according to its preliminary full-year results.
After a year dominated by mega bulk annuity deals, K3 Advisory looks at how the Carter and Parker scheme made its £9.3m buy-in attractive to insurers.
Nimble footwork enables small schemes to compete with the big boys in the buyout market, says Stephanie Hawthorne.
Legal & General (L&G) completed 28 bulk annuity transactions with UK pension schemes over the course of 2019, its annual report reveals.