Global professional services firm Aon’s risk settlement team has a total transaction volume of £100bn across its three business areas, including bulk annuity business, longevity reinsurance business and transactions in which Aon provides due diligence advice to insurers.
Martin Bird, senior partner and head of UK risk settlement at Aon, said the UK pension risk settlement market has experienced phenomenal growth over the past 15 years.
While the market dates back three decades when large annuities were strictly for insolvent sponsor plans, it has changed dramatically since the mid-2000s.
The arrival of new insurance market players has led to plans starting to use large annuities as a core part of their risk management investment strategies, introducing the ability to “buy in”.
Bird said: “Aon’s team moves with and anticipates the market, and the scope of our capabilities means we have worked across the board to triple the £100 billion mark. It’s not just large schemes, the risk settlement market for smaller schemes is also booming, taking the total number of large pension annuity transactions completed in 2025 to 367.”
“We continue to see continued change and innovation in the market and all aspects of it. For example, there has been a significant recent shift in comprehensive plan insurance transactions due to healthier financing conditions and the transition to acquisitions.”
He continued: “For insurers, there is now a greater focus on member experience, providing more effective retirement support, better communication and caring for vulnerable scheme members. Insurers are also taking in more illiquid assets and developing ways to provide profit sharing to members. These are significant developments that come with experience.”
Looking ahead, the market is expected to develop further. Aon senior partner John Baines noted that the longevity reinsurance market is constantly developing new intermediaries and cost-effective solutions for pension plans to gain reinsurance capacity.
Additionally, plans that previously participated in longevity swaps are now moving to batch annuities.
He added: “For insurers, there will inevitably be a focus on how to manage this vast pipeline of lean and small deals as well as large deals. There are at least five insurers actively involved in both areas.
“Above all, we understand the capacity, interest and governance of insurers to underwrite the first large annuity transactions in excess of £10bn. We know there is interest from some scheme stakeholders, but who will be the first one remains to be seen.”
