Insurers and consultants are confident about their ability to handle the high volume of bulk annuity deals, but juggling demand for resources as schemes transition from buy-in to buyout could be tricky, as Bradley Gerrard reports.
The unbridled enthusiasm running through the bulk annuity market might make it seem like the sector has no concerns. Multiple forecasts expect annual volumes of around £50bn for the next few years, and insurers are uniformly confident about their capital stash to fund the pipeline of new business.
But this enthusiasm is tempered slightly when the subject of dealing transitioning from buy-in to buyout arises.
Such decisions, which involve a scheme that is holding an insurance contract as an asset on its balance sheet deciding to transfer its members and assets to an insurer, are notoriously time-consuming, which inevitably ups the risk of complications and complexity. A key question remains: does the sector have the capacity to manage this transition for hundreds of pension schemes?
As Jill Ampleford, partner and head of trustee consulting at LCP, explained to Pensions Expert, the process is the “biggest challenge” due to the growing number of schemes wanting to cross the proverbial bulk annuity Rubicon.
Commenting in an outlook article looking forward at 2026, she said: “Insurers have written record volumes of transactions in recent years, and this surge in activity combined with operational pressures across administrators means that schemes can find themselves in an extended holding pattern.
“The key challenge for 2026 will be maintaining momentum without being overwhelmed by regulatory, operational, and market-capacity constraints.”
Insurers investing to manage capacity
Others acknowledge this pressure too.
“Operational capacity is a fine balance,” says Dominic Carpenter, bulk annuities commercial and strategy director at Canada Life. “Over-resourcing a business is not sustainable but doing too little would compromise the service and support members will rightly expect.”
Innovation through the adoption of artificial intelligence technologies could help, Carpenter adds, but caution is needed to ensure the service quality and human interaction remain for scheme members.
Targeting investment in the right places could be key if insurers are going to succeed in the increasingly competitive market for buy-in to buyout shifts.
“Insurers’ investment in their post-transaction teams and processes is particularly welcome to address the pressures from rapidly increasing numbers of schemes seeking to transition from buy-in to buyout.”
David Stewart, a partner at LCP, highlights that a key area of focus for insurers is “operational resource” and suggests there has been heavy recruitment into pre-transaction (pricing and origination) teams, and even more into post-transaction teams.
“Insurers’ investment in their post-transaction teams and processes is particularly welcome to address the pressures from rapidly increasing numbers of schemes seeking to transition from buy-in to buyout,” he says.
Last month, Brightwell – service provider for the BT Pension Scheme – announced that it had taken on the Rolls-Royce Pension Fund’s in-house administration team as part of the process of transitioning the scheme to a full buyout with Pension Insurance Corporation.
Richard Gibson, head of risk transfer at Barnett Waddingham, agrees that resources are “a limiting factor” when schemes are transitioning from buy-in to buyout, but argues that solving these issues with hiring or technology solutions would mean “capacity and appetite will continue to increase each year”.
Is the bulk annuity sector at ‘peak strain’?
While premium volumes have remained broadly stable – even down slightly in 2025 compared to the previous two years – the number of transactions has increased significantly.
Adam Davis, partner at Isio, expects the market “to exceed 400 transactions in 2026” as small scheme transactions continue to be popular with all active insurers. However, this comes with its own issues for the market to solve.
“We are likely at or near peak resource strain, particularly for administrators, driven by a combination of buy-in data cleanses, GMP equalisation and dashboards work,” Davis adds.
He expects such activity to “tail off over the coming years”, meaning transaction volumes would begin to decline and ease the pressure on resources.
Some believe the insurance sector’s capacity sits at around £65bn to £70bn a year, in excess of the projected £50bn volume.
Stephen Purves, head of risk settlement at XPS, says insurer capacity “may be stretched if this volume is made up of a large proportion of smaller deals”. That said, the market has coped so far “with fewer insurers in the market and less developed technology”, he adds.
With most insurers reportedly building their teams to target increased volumes and the pursuit of more streamlined processes to help with end-to-end support, many in the industry believe the challenges of 2026 can be dealt with.
“Insurers have scaled up significantly to meet the operational demands that these high volumes necessitate,” says Christopher Rice, head of trustee services at Broadstone. “New entrants have also increased capacity in the market and will further support buoyant levels of dealmaking over the coming years.”
