UK bulk annuity market set for 2025 surge – Aon

Written by Michael Griffiths

28/01/2025

The UK’s bulk annuity market is set for “continued development and innovation” in 2025, Aon has stated, amid high demand from UK pension schemes.

Aon suggested that improved pension scheme funding levels, largely due to yield rises, have prompted an increase in demand for de-risking using insurance.

The total volume of bulk annuity business completed in the UK in 2024 is expected to be in the region of £45bn to £50bn.

Aon believes that the insurance market has responded to meet this demand with both “innovation and new participants”, with further developments also anticipated by the group.

Partner in Aon’s UK risk settlement team, Mike Edwards, said: “Over the course of last year, there were various market changes that benefited smaller to mid-sized schemes, dispelling any myths that the market was only open to mega schemes.

“New market entrants, including Royal London and Utmost, completed their first deals below £100m, while most of the established participants expanded their offerings at the smaller end of the market to give a better service via streamlined processes.”

Edwards also suggested that at the larger end of the market, deals over £1bn have become “business as usual”, and added that size is no longer viewed by insurers as a particular challenge.

“This demonstrates both the maturity of the market and the availability of capital to support continued growth,” he added.

“We worked with several insurers over the last year – including on the £1.4bn Sanofi transaction announced today – to develop innovative solutions to meet these challenges. This included issues relating to schemes’ illiquid asset holdings and the insurance of complex benefit features.

“Each year, this market breaks new ground and paves the way for more schemes to achieve their future aims. We expect 2025 to be no different.”

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