UK bulk annuity capacity reaches £60bn annually

The UK bulk annuity market has consolidated into a structurally higher volume range, with multiple data points now clustering around £50bn–£60bn of annual risk transfer capacity in 2025. This shift is being driven by both insurer-side appetite and scheme-side demand, with advisers and insurers now treating £50bn a year as the working baseline rather than an outlier. In research released in 2024, Pension Insurance Corporation (PIC) reported that 47% of pension experts expect the UK bulk annuity market to reach between £50bn and £60bn in 2025. A separate release on the same polling exercise confirmed that 47% of respondents expected the market to be between £50bn and £60bn next year, with 45% expecting between £40bn and £50bn. The poll covered 140 trustees, consultants and lawyers active in bulk annuities and was conducted at PIC's Annual Market Update.

Market capacity and insurer appetite

Consultancy analysis now places theoretical insurer capacity materially above the £50bn line, even if baseline appetite assumptions are more conservative. Lane Clark & Peacock (LCP) estimates that insurer capacity could stretch up to £70bn at current pricing levels, implying headroom over most demand projections. In its projections for 2026, LCP sets baseline insurer appetite at £40bn, separating day‑to‑day deployment assumptions from the upper bound of what balance sheets could support.

Capacity and appetite are central to how the market is now being framed. The distinction shows how insurers could absorb higher flows without breaching current risk and return thresholds. The £70bn estimate is explicitly tied to prevailing pricing, anchoring the idea that the system could absorb higher flows without breaching current risk and return thresholds. By contrast, the £40bn baseline appetite figure for 2026 reflects a more measured view of how quickly insurers are likely to write new business under normal conditions, even if they could go further if required.

Scheme demand and transaction volumes

On the demand side, advisory projections show a pipeline that remains strong but not uniformly aligned with the most bullish capacity estimates. LCP projects demand of up to £55bn in 2026, which sits below its £70bn capacity estimate but above its £40bn baseline appetite assumption. Professional Pensions reporting states that total volumes transacted in 2025 are expected to be around £40bn, even as the total number of deals is anticipated to comfortably surpass 300.

The anticipated £40bn of volume will be combined with more than 300 transactions. This combination indicates increasing distribution across a larger number of schemes. This marks a shift away from activity concentrated in a small number of mega‑deals. PIC chief origination officer Mitul Magudia has stated that "the bulk annuity market is now firmly established as a £50bn a year market," aligning management's characterisation with the central tendency of the poll results. The poll itself, covering trustees, consultants and lawyers, shows that almost half of respondents cluster around a £50bn–£60bn outcome for 2025, with almost as many expecting £40bn–£50bn.

These expectations sit alongside adviser projections that total volumes in 2025 will be around £40bn, underlining a gap between what stakeholders see as the market's structural capacity and what is expected to transact in a given year. At the same time, the anticipated deal count surpassing 300 reinforces the view that the market's infrastructure and execution capability are now calibrated for sustained high‑volume activity, even when headline sterling totals fluctuate within the £40bn–£60bn band. With capacity estimates stretching to £70bn and projected demand rising into the mid‑£50bn area by 2026, the balance between appetite, pricing and execution throughput will determine whether £60bn becomes a realised annual run‑rate rather than just an upper‑end forecast.

--- Sources: https://www.lcp.com/ https://europeanpensions.net/ep/Almost-half-of-pension-experts-expect-the-bulk-annuity-market-to-reach-50-60bn-in-2025.php https://www.actuarialpost.co.uk/article/bulk-annuity-market-anticipated-to-rise-by-gbp60bn-by-2025-24057.htm