PIC’s market poll suggests bulk annuity market could hit £60bn in 2025

Pension Insurance Corporation plc (PIC), a specialist insurer for defined benefit pension schemes, has disclosed that in a recent poll of 140 trustees, consultants, and lawyers working in the bulk annuity market, 47% expected the market size next year to be between £50 and £60 billion.

In contrast, 45% of respondents predict it would be between £40-50 billion. According to PIC’s Annual Market Update, 52% of respondents believe that the biggest impact on pricing levels in the next 12 months is more large transactions taking up capacity would be the main issue, with 25% suggesting new entrants to the market, 18% voting for funded reinsurance, and 5% Solvency UK.

Regarding surpluses, 57% of respondents believe that any surplus should only be returned to the sponsor after the buyout, while 3% voted that trustees should return the surplus to the sponsor and re-risk the pension scheme to make up the difference.

The biggest challenge facing new bulk annuity market entrants according to 63% is a track record with trustees, while 16% believe it is asset sourcing capability, and 13% said pricing capability.

Mitul Magudia, Chief Origination Officer at PIC, said: “We were delighted that such a strong cross-section of the industry were able to join us for our Annual Review of the Year. As the results of our polling show, the bulk annuity market is now firmly established as a £50 billion a year market.

It’s worth noting that the market volume size range reflects the uncertainty about the timing of larger scheme transactions. One or two of these transactions in a year will likely push the market up to £60 billion. What is more important for PIC, however, is that we continue to offer a whole of market solution, capable of addressing the needs of small schemes right through to the very biggest.”

Panellist also discussed how social value is created both during a project’s construction phase which, for example, typically sees the creation of hundreds of jobs, and apprenticeships, and during the operational phase, which can lead to improved healthcare and wellbeing outcomes, the revitalisation of urban centres, and a more cohesive social fabric.

There was also a discussion about the work PIC is doing with local authorities and other stakeholders to bring forward enough viable urban regeneration projects to satisfy the considerable demand from long-term investors.

This helps secure the cashflows needed to back the pensions of PIC’s policyholders over the coming decades in a growing bulk annuity market.

Panellists also addressed questions on PIC’s progress on sustainability issues, including how PIC’s suppliers and counterparties are responding to sustainability concerns.

Notably, PIC has achieved a 28% decrease in the Weighted Carbon Intensity of its public credit investment portfolio compared to its 2019 baseline, surpassing its 2025 reduction target of 25%.

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