Smaller pension schemes have traditionally struggled to access the insurance market, but significant changes have made bulk annuity transfers more compelling, as Bradley Gerrard reports.
Blockbuster deals might make bigger headlines, but a clear and growing demand has established itself at the smaller end of bulk annuity transactions.
Heightened competition for insuring sub-£100m defined benefit (DB) pension schemes has emerged partly as new providers, including Royal London and Utmost, focus their efforts here, but also because established players like Just Group and Aviva are increasingly active in this area.
This market shift at the smaller end makes the work of trustees both easier and harder, however.
With more players, it’s easier to get involved in the game, but with more choice comes more responsibility.
Those overseeing schemes need to adopt a commercial mindset and thoroughly analyse the options available to them, rather than simply taking the first one on offer.
A compelling case for schemes and insurers
By canvassing the opinions of 17 insurers and consultants as part of a Pensions Expert survey, it’s clear that a host of crucial factors have changed to make bulk annuity transfers more compelling for schemes and increasingly attractive for insurers.
“Key to the increase in demand is… confidence from trustees and their advisers that they can expect competitive, affordable pricing from insurers alongside a quality member experience offering.”
Dominic Carpenter, Canada Life
Deepash Amin, head of new business strategy at Pension Insurance Corporation, says the entire DB market is now “much better funded than it has ever been”, meaning schemes that would previously have struggled to complete a buyout or buy-in now have far better prospects.
“This change in market dynamic, which was of concern to policymakers a few years ago, is now being addressed by insurers, who are transacting with smaller schemes in record numbers,” he says.
Building on this, Dominic Carpenter, bulk annuities commercial and strategy director at Canada Life, says the growth in smaller bulk annuity deals is driven by a desire from schemes to derisk.
“Key to the increase in demand is improved funding levels across the board and increased confidence from trustees and their advisers that they can expect competitive, affordable pricing from insurers alongside a quality member experience offering,” he explains.
The dominance of small scheme transactions
More than 350 bulk annuity transactions were completed in 2025, with transactions below £100m accounting for more than 85% of all deals completed in the first half of last year, according to LCP. At the start of 2026, Just Group reported that it completed 130 deals in 2025, a record for a calendar year.
Research by Pensions Expert echoes this data. We analysed public announcements of more than 300 bulk annuity deals over the past three years, and found that more than half related to sub-£100m pension schemes.
Streamlining processes for greater efficiency
More importantly, it’s the capabilities of the supply side of bulk annuity transactions that have enabled a rise in such deals being inked.
“It’s not that smaller schemes are necessarily more attractive as a business opportunity to insurers – what’s changed is the market’s ability to deliver solutions, whatever the size, and the knock-on confidence this has given schemes of all sizes that insurers can support scheme and member needs for the future,” Carpenter adds.
Unsurprisingly, new technology – which is increasingly likely to include AI-driven processes – has helped turbo-charge the market, according to some.
David Stewart, a partner at LCP, says insurers have “invested in streamlining their processes for smaller transactions” – while several consultants have also established their own small scheme services.
“[This] has allowed them to write these much more efficiently,” Stewart explains. “Just and Aviva, pioneers of such streamlined insurer processes, wrote over 70% of sub-£100m transactions between them in 2024.”
“Insurer processes have become more efficient, reducing marginal costs and resource requirements previously associated with smaller deal sizes.”
Tom Ashworth, WTW
The notion of insurers revamping internal systems was backed by others, including Tom Ashworth, senior director of pension risk transfer at WTW.
“As the market has matured, insurer processes – from pricing through to execution and beyond – have also become more efficient, reducing the marginal costs and resource requirements previously associated with smaller deal sizes,” he says.
This suggests that the insurance industry will continue to hone its processes to enable swifter engagement with trustees.
Streamlining the risk transfer process: it’s harder than you might think
Members of the Endgame Perspectives Group, an industry collaboration of insurers and advisers, explore how streamlined services have developed, their limitations, and how they can better serve pension schemes and members. Read the full article.
Testing the margins of the market
That could make the future of this market interesting, particularly as it’s already creating a downward pressure on the profitability of these deals.
“In years gone by, due to the limited insurer competition at the smaller end of the market, insurers were able to transact at higher margins than seen on larger transactions,” explains Iain Church, head of core transactions at Hymans Robertson.
“This heightened profitability attracted more providers to invest in their ability to service smaller schemes, which, over time, has competed these profits away.
“Insurer profitability on smaller transactions is now comparable to that of larger ones.”
Church adds that smaller transactions are still attractive because they are less “lumpy” than larger deals, and securing larger volumes of them could smooth out an insurer’s financial results.
That could appease shareholders, particularly for the listed cohort of insurers.
The challenge for insurers, however, will be the constant refinement of systems to bolster margins while still ensuring they offer a compelling service that increases their chances of being selected.
Bradley Gerrard is a freelance journalist.
