The bulk annuity market is bracing for sustained high volumes, but questions are emerging about whether the sector can keep pace when pension schemes move from buy-in to buyout. Forecasts point to annual transaction levels around £50bn for the coming years, and insurers say they have the capital to back that pipeline. Yet the operational reality of managing the transition process is proving to be a different beast entirely.
Transitioning from buy-in to buyout involves a scheme that holds an insurance contract as an asset deciding to transfer its members and assets fully to an insurer. The process is notoriously time-consuming, which raises the risk of complications and complexity as more schemes look to make the move.
Jill Ampleford, partner and head of trustee consulting at LCP, described the transition process as the “biggest challenge” facing the market. In an outlook article for 2026, she noted that insurers have written record volumes in recent years, and this surge in activity combined with operational pressures means schemes can find themselves stuck in extended holding patterns.
“The key challenge for 2026 will be maintaining momentum without being overwhelmed by regulatory, operational, and market-capacity constraints,” she said.
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Dominic Carpenter, bulk annuities commercial and strategy director at Canada Life, acknowledged that operational capacity requires a delicate balance. “Over-resourcing a business is not sustainable but doing too little would compromise the service and support members will rightly expect,” he said. Carpenter added that while artificial intelligence tools could help streamline certain tasks, caution is needed to preserve service quality and human interaction for scheme members.
David Stewart, also a partner at LCP, pointed to heavy recruitment into both pre-transaction and post-transaction teams as insurers position themselves for higher volumes. “Insurers’ investment in their post-transaction teams and processes is particularly welcome to address the pressures from rapidly increasing numbers of schemes seeking to transition from buy-in to buyout,” he said.
Richard Gibson, head of risk transfer at Barnett Waddingham, agreed that resources are a limiting factor during these transitions, though he suggested that hiring and technology investments would gradually expand capacity over time.
Market activity and capacity limits
While premium volumes have remained relatively stable, the number of individual transactions has risen sharply. Adam Davis, partner at Isio, expects the market to exceed 400 transactions in 2026 as small scheme deals remain popular across all active insurers. He cautioned, however, that administrators are likely operating near peak strain levels.
“We are likely at or near peak resource strain, particularly for administrators, driven by a combination of buy-in data cleanses, GMP equalisation and dashboards work,” Davis said. He expects that wave of activity to ease in the years ahead, which would gradually reduce pressure on transaction teams.
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Stephen Purves, head of risk settlement at XPS, said the insurance sector’s capacity sits at roughly £65bn to £70bn annually, above the projected £50bn volume. That headroom could narrow if a large proportion of deals involve smaller schemes, he noted, though the market has so far coped despite fewer insurers participating and less advanced technology than exists today.
The transition process itself can be complicated by external factors. Last month, Brightwell, the service provider for the BT Pension Scheme, took on the Rolls-Royce Pension Fund’s in-house administration team as part of moving that scheme toward a full buyout with Pension Insurance Corporation.
Christopher Rice, head of trustee services at Broadstone, said most insurers have significantly scaled up their operations to handle the volume demands. “New entrants have also increased capacity in the market and will further support buoyant levels of dealmaking over the coming years,” he said.
Whether the sector can fully absorb the expected transaction pipeline without service disruptions remains to be seen. Insurers are investing in their teams and processes, but the sheer number of schemes looking to cross from buy-in to buyout will test those preparations.
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