LONDON-Private credit giants have found a $1 trillion-plus source of capital to invest: dowdy old British pensions.

London's Standard Life said on Thursday it struck a deal to invest in private-market assets supplied by buyout company CVC Capital Partners, Goldman Sachs and PGIM, the asset-management arm of Prudential Financial. The U.K. insurer said the partnership would help boost its business taking over the management of defined pension plans from companies.

The deal, in which investors will earmark $2 billion, is the latest example where U.K. life insurers managing pensions are turned into a source of funding for private credit.

Apollo, Brookfield and Blackstone did their own deals over the past year, muscling in on a booming market for legacy pension plans that life insurers are competing to take over from the companies that first sponsored them.

Britain is home to thousands of these old defined-benefit plans, which fell out of favor 25 years ago and are mostly closed to new members. The biggest still manage tens of billions of dollars in assets.

Defined-benefit plans in the U.K. have more than GBP1 trillion ($1.35 trillion) of liabilities they haven't offloaded to insurers, said Stephen Purves of consulting firm XPS, who advises on transfer deals. "It's a big prize," he said.

Insurers are betting they can earn more than they have to shell out to retirees by adding private assets to the mix of government and corporate bonds most pension plans own before being taken over. The model was pioneered by Apollo and its competitors in the U.S.

It means Brits will increasingly depend on private markets-at home and in the bigger American market-for their retirement income.

That could push capital into housing, energy systems and infrastructure, possibly giving Britain's sluggish economy a boost.

But regulators and analysts worry insurers are chasing complex offshore investments that introduce new risks into the industry as part of the pensions boom.

About 40% of the assets backing U.K. insurers' fast-growing retirement books come from private markets and other sources, where assets don't trade frequently or on exchanges, analysts at S&P Global estimate. Of that, around a third are private-credit investments such as loans to midsize companies, more than in other European countries.

The caveat, the ratings agency said in July: Lack of standardized data made it hard to calculate insurers' exposures to different types of assets.

Transfers of U.K. pension plans to insurers aren't new. But they have proliferated since rising rates pulled down pension plans' obligations faster than their assets. Many plans flipped to a surplus for the first time in over a decade.

All of a sudden, they could afford to pay insurers to take on their obligations through a contract known as a bulk annuity. The first step is to hand a plan's assets over to an insurer, which starts to manage them. Eventually, it administers the whole thing.

Insurers like private-market assets because they are a good match for long-dated liabilities.

Gareth Truran, the Bank of England official who supervises insurers, said this spring pressure to secure profit margins is encouraging some insurers to take risks without sufficient compensation, though he added that their assets are overwhelmingly investment grade.

Brookfield recently bought life insurer Just Group, which it plans to feed with infrastructure, energy and real-estate investments.

Instead of buying an insurer, Blackstone agreed to supply private-credit assets for Legal & General to buy against its huge book of retirement obligations. One early deal: lending to a grocery-distribution center in North Carolina.

"The U.K. is one of our most important markets," said Phil Sherrill, an insurance executive at Blackstone.

Blackstone is also tapping in to Britain's booming pensions market indirectly through a Bermudan reinsurer it provides with private-credit investments.

The Bank of England, however, says U.K. insurers don't hold enough loss-absorbing capital against this kind of offshore arrangement and plans to make them hold more.

Of the North American players in the U.K., Apollo is taking the biggest swing.

Athora, a European insurer in which it owns a minority stake, recently bought Britain's Pension Insurance Corporation, which specializes in taking pension plans over from companies. Combined, the pair form one of Europe's biggest life-insurance groups with GBP118 billion in assets for 3.1 million savers and retirees.

They include current and future pensioners from Rolls-Royce and British American Tobacco, which Pension Insurance Corporation took over before Athora swooped in. Among its latest deals: to take on all 253 members of the pension plan for the Associated Board of the Royal Schools of Music.

"It's one of the largest and most vibrant in Europe," Athora CEO Todd Solash said of Britain's market for pension transfers. He said Athora's relationship with Apollo, its co-owner, will give Pension Insurance Corporation access to private-credit assets that the American investment giant churns out.

Plenty of those assets will be in the U.K., Solash said, matching Athora's U.K.-pound denominated liabilities. Apollo already has major investments here such as lending several billion pounds to build a nuclear power plant in southern England.

Unlike Athene, its in-house insurer in the U.S., Apollo doesn't own Athora outright. Instead it gets paid to source and manage assets for Athora. In quarterly earnings published this month, Apollo said it gained $65 billion in fee-paying assets to manage in the second quarter thanks to Athora's purchase of PIC.