Bulk Annuity Market 2025: The Opportunity for Schemes

Following the rapid rise in gilt yields at the end of 2022, there was a record-breaking volume of buy-in transactions completed in 2023, with 2024 falling only just short of that record. This was our experience at IGG too. Now, has the UK bulk annuity market entered a new phase?

At first glance, the market may appear less headline worthy with fewer large transactions, but scratch beneath the surface and we’re seeing a valuable opportunity emerge for many defined benefit pension schemes. For those who are responsible for preparing and executing their scheme’s de-risking strategy, it means now may be an ideal time to reassess the potential for buy-in transactions.

Market Activity: Slower Volumes, Sharper Focus

Let’s start with the numbers. At the start of the year, it was predicted that 2025 could be a record-breaking year in terms of the volume of bulk annuity transactions completed, with estimates ranging from £45bn to £50bn. However, total market volumes are now forecast at £35bn to £40bn, around £10bn below original projections.

This is predominantly driven by there being fewer large (£1bn+) deals reaching the market. We may hypothesise that this is due to the Government’s planned changes to surplus extraction, or it may be as simple as sustained high gilt yields continuing to suppress asset values for many pension schemes, or pension schemes battling to come out of illiquid assets.

In spite of this lower volume in 2025, it’s expected that the actual number of transactions completed will break records as the smaller end of the market continues to fire on all cylinders. And while the overall volume is lower, this has created a notable shift: insurers are competing more actively for mid-sized and smaller schemes.

Competitive Pricing for Smaller Schemes

Whether it be this change in deal flow, economic conditions or simple market dynamics of increased competition resulting from new insurers (or most likely a combination of all of these), we’re seeing stronger pricing and broader engagement for schemes below the £500m mark.

For pension schemes with a funding level of between 95% and 100% on an estimated solvency basis, it may be that a bulk annuity transaction is now within reach – the shifting market has brought shifting opportunities.

How You Engage with the Market Matters

While the current market environment is favourable, the approach to market is more important than ever. As trustees, we’re now in a fortunate landscape where in the right circumstances all active insurers may be willing to quote on a pension scheme. However, if you were to approach all the insurers available, it’s likely some would exclude themselves from the process due to the high levels of competition. This may exclude preferable insurers, purely as a result of approaching the market in the wrong way.

Instead, by flipping the traditional process on its head and working through non-pricing factors before the approach to market, you can create a refined list of insurers to talk to that you know fit your selection criteria. This will result in better engagement from insurers, who know they have already made a shortlist and are a genuine option, leading to better pricing, and competitive tension can still be achieved as schemes will be able to obtain multiple quotes.

Risk brokers should be relied upon to advise upon the best approach for the specific circumstances of your scheme, considering the latest market dynamics. Well prepared schemes that approach the market in the most effective manner, are most likely to secure the best outcome for their members.

Next Steps for Schemes

If your scheme’s long-term goal is buyout, current market dynamics represent a window worth exploring. We recommend:

• Assessing your funding position in light of recent pricing trends
• Engaging advisers and professional trustees to evaluate readiness
• Starting to prepare the groundwork, even if transaction timing is still 12–24 months out

As a leading professional trustee firm in the bulk annuity market, we’re driving innovation in holistic de-risking strategies that deliver better outcomes for schemes, sponsors, and members. Do get in touch with us if you’d like to discuss working together to achieve your endgame goals.

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