UK bulk annuity market to expected to reach up to £60bn in 2025

Written by Paige Perrin

01/10/2024

Almost half (47%) of pension experts expect the bulk annuity market to reach between £50bn and £60bn of transactions next year, according to Pension Insurance Corporation (PIC) research.

The survey also revealed that 45% of respondents thought the bulk annuity market would be between £40bn and £50bn.

In addition to this, PIC found that 57% of respondents felt surpluses should only be returned to the sponsor after buyout, while 3% said that trustees should give the surplus to the sponsor and re-risk the pension scheme to make up the difference.

When asked what the biggest challenges facing new entrants to the bulk annuity market were, 63% said a track record with trustees, 16% said asset sourcing capability, and 13% said pricing capability.

Furthermore, over half (52%) said more large transactions taking up capacity would have the biggest impact on pricing levels in the next 12 months, with 25% suggesting that it would be new entrants to the market.

Meanwhile, 18% of those polled said funded insurance would have the biggest impact on pricing levels in the next 12 months, while 5% said it would be Solvency UK.

Commenting on the results, PIC chief origination officer, Mitul Magudia, said: “As the results of our polling show, the bulk annuity market is now firmly established as a £50bn a year market.

“It’s worth noting that the market volume size range reflects the uncertainty about the timing of larger scheme transactions.

“One or two of these transactions in a year will likely push the market up to £60bn.

“What is more important for PIC, however, is that we continue to offer a whole of market solution, capable of addressing the needs of small schemes right through to the very biggest.”

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