The volume and size of deals to relieve sponsoring employers of their defined benefit pension liabilities in the United Kingdom is expected to increase in coming years.

The popularity of mechanisms, such as pension buyouts and buy-ins involving the transfer of pension liabilities to insurance companies, has been growing as sponsoring employers — and insurers — become more comfortable with the practice, experts say.

As the marketplace capacity for such deals increases, the size of employer pension transfers to insurers is expected to grow.

While the United States has seen some big pension risk-reduction deals, such as the transfer of General Motors Co.'s pension liabilities, the practice of transferring defined benefit pension liabilities via a bulk annuity sale to an insurer has been a well-established practice in the United Kingdom during the past 10 years.

Pension liabilities can be transferred wholly to insurers through a buyout.

Under such deals, the risk is completely removed from the sponsoring employer and trustees of the plan and transferred to an insurer via a bulk annuity, said Martyn Phillips, head of buyout consulting in the pensions arm of London-based Jardine Lloyd Thompson Group P.L.C.

Typically, to facilitate such deals, the sponsoring employers will inject some capital into the plan, he said.

When buyout transactions are completed, each member of the pension plan has an individual policy and relationship with the insurer, he said.

Under so-called “buy-in” deals, employers can transfer a portion of their pension liabilities — typically those pensions already in payment to retirees — to an insurer.

These deals do not completely remove the liability of the sponsoring employer or trustees to the plan and its members, but typically are more affordable, experts say.

Other mechanisms, such as longevity swaps, also can be used by sponsoring employers to remove pension liabilities from their balance sheets.

Earlier this month, British insurer Aviva P.L.C. agreed to a record longevity swap, transferring the risk of 19,000 pension plan members to Swiss Re Ltd., Munich Reinsurance Co. and Score S.E. for £5 billion ($8.37 billion).

In 2013, likely about £7 billion to £8 billion ($11.72 billion to $13.40 billion) in pension liabilities were transferred by companies in the United Kingdom via such mechanisms, Mr. Philipps said.

Still, this represents just a “tiny fraction” of about £1 trillion to £2 trillion ($1.674 trillion to $3.350 trillion) of defined benefit pension liabilities currently on the balance sheets of U.K. employers, he said.

While there are relatively few insurers willing and able to perform pension buyouts and buy-ins in the United Kingdom, there is sufficient capacity for the time being.

“The capacity has not really been tested yet,” said Dominic Grimley, risk settlement advisor at Aon Hewitt in Birmingham, England.

And while there is still sufficient insurance and reinsurance capacity for buyout and buy-in deals, there potentially will be a shortage of capacity longer term compared with demand, said Torben Thomsen, chief pricing officer for life and health insurance at Swiss Re Ltd., which reinsures such transactions.

Sponsoring employers that already have completed buyout or buy-in deals likely will be pleased they have dealt with those pension liabilities, he said.

And while there still is ample capacity for such deals, an expected increase in interest from sponsoring employers could cause a “crunch” in terms of a lack of expertise and other resources, Mr. Phillips said.

There are about 10 insurers actively engaging in buyout and buy-in deals in the United Kingdom, and about five or six of those represent “viable” counterparties for large sponsoring employers, Mr. Philipps said.

The insurers include Aviva, Legal & General P.L.C., Pension Insurance Corp., Prudential P.L.C. and Rothesay Life Ltd.

In February, the Surrey, England-based Rothesay announced it had acquired MetLife Assurance Ltd., a leading bulk annuity provider in the United Kingdom and Ireland.

MetLife Assurance has about £3 billion ($5.02 billion) in assets under management, and has conducted bulk annuity transfers that cover more than 165,000 pension plan members.

In a statement announcing the deal, Rothesay Life said that “macro-economic and demographic factors are set to drive demand” and that it “expects there to be further long-term expansion in pension buyouts and buy-ins.”

In the United Kingdom, pressure from the pensions regulator for employers to better fund their company pension plans and from the insurance regulators (formerly the Financial Services Authority and now the Prudential Regulation Authority) for life insurers to be better reserved, have boosted the pension buyout market, Mr. Thomsen said.

Because the pension plans that are subject to buyout deals tend to be well funded, and the life insurers that take on their liabilities are well reserved, the cost of reinsurance for such transactions in the United Kingdom is more affordable than it would be in some other markets, he said.

Many sponsoring employers are eager to remove defined benefit pension liabilities from their balance sheets and now are in a financial position to be able to afford to go ahead with buyout or buy-in deals, said David Ellis, U.K. head of bulk pensions insurance at Mercer Ltd.