Britain’s biggest money manager Legal & General saw profits jump as it cashed in on a boom in buyouts of UK pension funds.
The buyouts, which are also known as pension risk transfers (PRTs), are when businesses pay financial firms to take over the running of legacy pension schemes.
It is one of L&G’s most lucrative divisions, with the FTSE 100 firm landing £3.4billion worth of PRT deals in the first six months of the year, up from £1.5billion in 2024.
It helped the group, which manages over £1 trillion in assets, make a profit of £859million for the period, 6 per cent higher than last year.
L&G boss Antonio Simoes said it planned to expand further into PRT, saying it was eyeing £42billion worth of deals.
Employers are keen to offload defined benefit pension schemes, most of them long closed to current employees but which still incur costs.
L&G, which manages over £1trillion in assets, made a profit of £859m in the first six months of the year, 6% higher than last year and better than analysts had predicted
The surge in PRT deals also comes despite Chancellor Rachel Reeves introducing measures to try to encourage employers to keep running defined benefit schemes in the hope they will invest in areas that boost the UK economy.
So lucrative is the pension transfer market it has attracted new rivals to L&G.
In July, Athora, a European insurer owned by US private equity giant Apollo Global, snapped up Pension Insurance Corp, one of the UK’s biggest players in PRT, for £5.7billion.
And last week Canadian outfit Brookfield swooped on LSE-listed retirement saving specialist Just Group with a £2.4billion bid.
But Simoes said L&G was ‘firmly on track’ to hit targets and reiterated plans to hand £5billion to its shareholders over three years.
The shares dropped 2 per cent, or 5.3p, to 256.2p as analysts were disappointed that its solvency ratio, a key measure of financial strength, had dropped to 217 per cent from 223 per cent.
L&G’s push into the pensions market comes after Simoes warned Britons were not saving enough for retirement and called on the Government to lower the age of auto-enrolment in workplace schemes to 18, from 22.
‘We really need to tackle how much we as individuals and employers are contributing,’ he told the Daily Mail.
Last month, the Work and Pensions Secretary, Liz Kendall, announced a review of the state pension age alongside a wider probe into retirement savings.
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Pension deals boost profits at Legal & General as employers look to offload defined benefit schemes