Record funding levels have put almost half (45%) of UK defined benefit (DB) pension funds in a position to secure full buyouts, according to consultancy LCP, which expects the proportion to rise to 80% within five years.
While new options such as the proposed surplus flexibilities in the upcoming Pension Schemes Bill and the launch of TPT’s DB superfund are prompting trustees to reassess their endgame strategies, LCP said the insurance route remains the preferred choice for most schemes.
The government’s Pension Schemes Bill aims to enable DB schemes to use surplus assets to improve member outcomes and support economic growth.
But research by Standard Life found a split among trustees over the proposed reforms. Only 32% of respondents said they were comfortable with the changes, while 29% had no opinion. Many cited concerns about the potential impact on members and the long-term sustainability of schemes.
Despite the emergence of alternative endgame models, demand for bulk annuities remains high, driven by major transactions from blue-chip sponsors such as Rolls-Royce and Ford.
LCP expects a “healthy” pipeline of £350bn to £550bn in buy-in deals over the next decade. Insurer capacity could reach £70bn in 2026, supporting annual transaction volumes of £40bn–£55bn, it said.
According to the consultancy, insurers are continuing to expand their capacity and asset-sourcing capabilities while competing on pricing and service quality.
The acquisitions of Just and Pensions Insurance Corporation (PIC), along with partnerships such as Legal & General’s tie-up with Blackstone, are expected to bolster long-term competition and sustain attractive pricing.
Earlier this month, Phoenix confirmed it was in talks with asset managers to expand its pension risk transfer (PRT) business.
Charlie Finch, partner at LCP, said: “Insurers have been upping their game over 2025. Fierce competition drove record pricing levels, a trend we expect to continue into 2026 as insurer appetite and capacity reach new highs. While endgame innovation continues apace, demand for the insurance route remains strong – as demonstrated by the £4bn+ buy-ins completed by the Rolls-Royce and Ford schemes in recent months.”
Ruth Ward, principal at LCP, added: “We expect a record 350 buy-in transactions this year – but that remains modest compared with the 2,250 schemes we estimate are already fully funded on buy-out.”
She noted that some of these pension funds may be “preparing for a transaction, some may be running on for a period before insurance, and others may be weighing up longer-term run-on or emerging alternative endgame options”.
“The right approach will be specific to each scheme, but at its core, the buy-in market offers attractive pricing and a strong focus on member experience. Schemes are in a powerful position to compare options and deliver positive outcomes for their members,” Ward said.
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