Competition drives best bulk annuity pricing in two years for UK pension schemes: Aon

Pricing in the UK defined benefit pension scheme bulk annuity market has reached its most favourable level in over two years, driven by increased competition, according to new data from Aon.

Mike Edwards, Partner, Risk Settlement Group, Aon, noted, “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.”

It should be noted that there is a combination of factors driving the situation, such as market conditions and heightened volatility, providing an investment environment that is enabling attractive insurer pricing.

Additionally, for schemes that are well-prepared, this pricing level offers an opportunity. The first half of 2025 was a period of market volatility, making the conditions favourable for schemes aiming to secure bulk annuities. This has also driven investment opportunities for insurers, and that has flowed through to pricing, explained Edwards.

Edwards stated, “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.”

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, Edwards emphasised.

Edwards concluded, “In one sense, there’s nothing new in this. 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.”

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