Approaching Bulk Annuity Processes in 2026

At the end of November, I took part in a roundtable hosted by Professional Pensions and Pension Insurance Corporation, looking ahead to how schemes should be approaching bulk annuity processes in 2026 and beyond. The discussion brought together trustees, insurers, advisers and administrators, and what struck me most was not that the market is radically changing, but that it is maturing.

From a trustee perspective, that maturity changes the questions we should be asking. The conversation is no longer just about affordability or whether buy‑out is possible. For many schemes, those hurdles have already been cleared. Instead, the focus is shifting to how we get there, when we do it, and what sort of outcome we want for members and sponsors along the way. Here’s what I think trustee boards should be thinking about as they plan for 2026.

A Polarised Market

First, the market is increasingly polarised. Across the schemes we work with, smaller schemes are typically heading straight to insurance as soon as they can. For them, the objective is clarity, finality and removing a disproportionate governance burden. The increased competition at the smaller end of the market has been a positive development, making that path more achievable than it was even a year or two ago.

Larger schemes, by contrast, often have the funding headroom to pause. Many are well funded on a solvency basis and can afford to take a more structured approach: running on, managing surplus, de‑risking gradually, and keeping insurance as a destination rather than an immediate transaction. For some, insurance may still be five, ten or even fifteen years away.

In between, there is a large cohort of schemes managing the journey towards buy-out. The key point here for trustees is that there is no single “right” answer, but there does need to be a clearly articulated strategy that reflects scheme size, sponsor objectives and member priorities.

Buy-in to Buyout: Understanding the Real Timetable

One of the most persistent misunderstandings, particularly at sponsor level, is around timing.

We regularly see schemes reach a position where insurance becomes affordable, only for sponsors to assume that means the job can be wrapped up quickly. In reality, the period between a buy‑in and a final buyout can extend for years, largely due to data readiness, benefit rectification and administrative capacity. From a trustee perspective, this matters for two reasons:

• First, expectations need to be managed carefully. This is a long project, not a quick transaction.
• Second, preparation can dramatically change outcomes. If work is done earlier – data cleansing, GMP equalisation, legal reviews – the apparent “gap” between buy‑in and buyout can shrink significantly.

What looks like a slow process is often simply the visibility of work that had not previously been tackled.

Administration must be Core to Endgame Planning

If there was one area where the whole table was aligned, it was administration.

Capacity constraints among administrators are now one of the biggest practical challenges in the market. Data cleansing, dashboards, GMP equalisation and day‑to‑day BAU activity are all competing for the same limited resource, and this is affecting when schemes can come to market and how long it takes to complete transactions.

As trustees, we need to treat administration as a core part of endgame planning. That means being clear who is doing the heavy lifting at each stage, considering specialist support where appropriate, and ensuring BAU administration does not suffer because of project work.

Ultimately, member experience pre and post buy-out is shaped more by administration than by the fine print of an insurance contract.

Surplus Changes the Conversation but Complicates Decisions

A recurring theme in the discussion was surplus. With many schemes now in surplus on a solvency basis, the conversation has moved beyond simple affordability.

Surplus creates opportunity for improved member outcomes, benefit enhancements or sponsor value – but it also introduces complexity. There is no standard approach to surplus distribution, and outcomes are heavily influenced by scheme rules and historical design.

For trustees, this reinforces the importance of early alignment with sponsors. Assumptions that surplus will automatically revert to the company are often misplaced, and difficult conversations are best had well before a transaction is underway.

Non‑price Factors No Longer “Nice to Have”

Perhaps the most significant shift I see is the growing importance of non‑price factors.

Where schemes are well funded, price is no longer the primary differentiator. Member experience, post‑transaction administration, optionality, and the insurer’s ability to deliver a smooth transition are increasingly central to decision‑making.

That places a responsibility on trustees to be clear about priorities. Insurers told us very candidly that the most successful processes are those with a focused, well‑reasoned set of objectives. Long shopping lists without a clear rationale tend to dilute engagement rather than enhance outcomes.

Looking Ahead

Success in 2026 and beyond will come from viewing bulk annuity transactions as journeys, not events. That means:

• A clear long‑term plan, understood by both trustees and sponsors
• Early and sustained preparation, particularly on data and administration
• Realistic expectations around timescales
• A continued focus on member outcomes, not just transaction price

If we get that right, the move to buy-out becomes less daunting, and far more likely to deliver the outcomes we all want for members, sponsors and the industry.

At IGG, our Risk Transfer team works with trustee boards to design and deliver endgame strategies that are right for each scheme – whether that’s preparing for buyout, exploring run-on, or optimising risk management along the way.

If you’d like to discuss how we can support your scheme’s journey, please get in touch with us.

Key Contact