The UK defined benefit pension scheme bulk annuity market is seeing the best pricing for over two years, according to Aon.
A combination of factors is driving the situation, but increased competition stands out as the most significant, with market conditions and heightened volatility providing an investment environment that is enabling attractive insurer pricing.
For schemes that are well-prepared, this pricing level offers opportunity.
Mike Edwards, partner in the risk settlement group at Aon (pictured), said: “There are a number of reasons for this pricing opportunity emerging. The most notable is the significantly increased competition that has developed within the market.”
There are now 11 active insurers and – along with the new entrants to the market – the established firms are expanding their addressable markets to cover schemes of all sizes.
“Quite simply, it means there are more insurers than ever before, competing on deals both large and small – and that is driving increasingly competitive pricing,” said Edwards.
The first half of 2025 was a period of market volatility – and those are favourable conditions for schemes looking to secure bulk annuities.
“It’s provided investment opportunities for insurers – and that has flowed through to pricing,” added Edwards. “Many insurers have also adjusted their investment strategies for new business, reflecting both narrower credit spreads and wider gilt spreads. It means that gilts have become a more attractive investment for providers.”
Edwards noted that with this background, trustees and employers who have been decisive in developing and confirming their endgame strategies – and who have opted for insuring their scheme as a result – have been in a position to capture the best pricing.
“In one sense, there’s nothing new in this,” Edwards said, “The benefit of being well-prepared is a market theme we have seen time and again in the last few years. But it does emphasise that it’s the schemes which are transaction-ready and able to approach the market with conviction, that get the best outcomes for all stakeholders.”
Comments