What next for the bulk annuity market?
The UK bulk purchase annuity market has evolved dramatically in recent years. As we look towards 2027, the direction of travel seems clear: a market that is truly competitive at all sizes, increasingly sophisticated, but also more accessible.
Strong defined benefit scheme funding and increased insurer capacity and favourable pricing all continue to support demand. Competition has therefore remained intense. During the first half of 2026, fewer billion-pound-plus transactions helped smaller and mid-sized schemes attract strong insurer engagement, although larger transactions were beginning to return to market in the second half of the year.
So, what might 2027 bring?
From mega deals to streamlined transactions
At the top end of the market, we expect further ‘mega’ deals. These deals will continue to test insurers' capacity, asset strategies and ability to deploy capital efficiently. They are also likely to drive innovation in transaction structures as schemes seek to transfer very significant liabilities while managing execution risk.
But the growth story is no longer simply about transaction size. Smaller schemes are becoming an increasingly important part of the market, supported by greater insurer competition and quality terms on offer. For instance, we have seen insurers offering to undertake and implement GMP equalisation during data cleanse; other insurers have developed profit sharing models.
We expect that trend of competition driving innovation to continue into 2027.
The result may be a market operating effectively at two speeds: highly bespoke structuring for the largest and most complex transactions, alongside increasingly efficient execution for smaller schemes.
Residual risks moves back up the agenda
The desire of schemes to secure residual risks cover alongside securing the scheme’s liabilities seems to go in cycles. Our recent experience suggests to us that residual risks is firmly back on trustees’ and sponsors’ radars at the moment.
Previously the reserve of large schemes (typically larger than £500m), there are increasing requests for access to such protections at the smaller end of the market. At the same time, more insurers than ever are actively writing (or looking to write) residual risks business.
However, one of the biggest challenges with residual risks transactions remains that they are resource-intensive for all parties, but particularly insurers and their advisers. For trustees, early legal and benefits due diligence will therefore become even more important. The objective should be to identify potential residual liabilities early enough to decide whether they can be corrected, insured or otherwise managed, rather than discovering them when buyout is approaching.
The horizon for 2027
The overarching theme as we look towards 2027 is one of choice. Trustees have more options, more insurer competition and more potential pathways to their endgame than ever before. With alternative consolidation solutions also competing for attention, even though insurance remains the dominant risk-transfer route, the strategic landscape continues to evolve.
For insurers, trustees and sponsors alike, success in 2027 will not simply be about accessing the BPA market. It will be about selecting the right route, preparing early and understanding exactly which risks will, and will not, be transferred.
Insurance Horizons
Looking ahead at the developments shaping the insurance sector
