The bulk annuity market (BPA) continues to be dominated by smaller transactions, with schemes below £100m accounting for 82% of deals (113 transactions) completed in the first half of the year, while half were below £10m, according to Aon's latest update.
The update, covering the first half of 2026, found there is ongoing strong competition for most smaller transactions, with schemes in the £20m-£100m range attracting more bidders in auction processes.
In contrast, only a single transaction over £1bn was completed in the first half of 2026.
The report noted that the recent number of transactions has placed “growing demands” on insurer implementation and administration teams, with “a number of insurers now utilising panels of third-party administrators to support implementation and ongoing servicing”.
It added: “Trustees should therefore carefully consider operational delivery, member servicing and implementation expertise alongside pricing when selecting an insurer.”
In total, there were £10.2bn of bulk annuity transactions during the first half of 2026, up from £9.7bn in the same period a year earlier, despite the number of deals falling from a record 160 to 138.
According to the report, volumes are expected to be “significantly higher” in the second half of the year, with Aon projecting full-year bulk annuity volumes to exceed £30bn for a fourth consecutive year.
The update stressed that while pricing remains an important consideration, trustees are increasingly placing greater emphasis on non-price factors such as member experience, operational capability, financial strength, environmental, social and governance (ESG) credentials and cyber resilience.
Aon Risk Settlement Group head of insurer due diligence, Sam Matto-Willey, said the UK bulk annuity market remained “as competitive as ever” in the first half of 2026.
“Competition among insurers remains exceptionally strong for trustees across both price and other important considerations, such as the member experience offering from insurers," Matto-Willey said.
“The depth of insurer appetite has been particularly evident for small and medium-sized transactions, with a greater number of insurers now active in this segment than ever before.”
Matto-Willey also highlighted several insurer ownership changes in 2026, including the acquisitions of Pension Insurance Corporation and Just Group, which concluded in the first half, and Standard Life developing a new capital partnership to target larger transactions.
“Whilst potentially short-term distractions impacting transaction volumes earlier in the year, these developments are expected to expand capacity and bring new opportunities to schemes,” he added.
