Journalists love big numbers. We love being able to tempt readers in with talk of billions of pounds changing hands in big transactions.
For pensions journalists, a guaranteed source of headline-grabbing numbers over the past few years has been the bulk annuity market. Whether it’s a mega buy-in – such as the £1.6bn deal between the BP Pension Fund and Legal & General announced this week – or punchy forecasts for annual activity, the ‘billions’ have kept on coming.
Except, that’s not really the case any more. Half-yearly reports from Aon and Hymans Robertson, released over the past few days, show that the first half of 2025 saw less than £10bn of bulk annuities completed in total – way less than in the first half of any of the last three years.
However, the data also shows that there were more deals completed in the first half of this year than the whole of 2021, and with transactions often picking up towards the end of a calendar year, I wouldn’t be surprised to see the 2025 total surpass 300.
This is, of course, great news for trustees of smaller pension schemes, as insurance companies and consultants alike have developed “streamlined” services to make it easier for all parties to complete small deals.
Almost all of the 10 insurers in the market (with Blumont and Just expected to merge soon) are open to quoting on schemes with less than £50m in assets, and Just Group and Aviva in particular have been very active at the small end of the market.
All this is good news – but I wonder whether some headwinds are starting to pick up. The promise of surplus release powers in the Pension Schemes Bill could dampen the appetite for insurance transactions, as Pensions Expert explored earlier this year.
In addition, the Prudential Regulatory Authority is scrutinising a niche part of the insurance industry – funded reinsurance – that has contributed to the competitive nature of the bulk annuity sector. We don’t know what changes it will recommend once it has conducted its review, but LCP has indicated that it may have an impact in the longer term.
Perhaps I will have to look somewhere else for a headline-grabbing number. Thank goodness for megafunds…
Nick Reeve is editor of Pensions Expert.
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