Will the BPA market reach £60bn in 2025?
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Nearly half of 140 trustees, consultants and lawyers working in the bulk annuity market expect transactions to reach between £50bn and £60bn next year, with 45% thinking it will be £40bn to £50bn, according to a new poll by DB insurer Pension Insurance Corporation.
Mitul Magudia, chief origination officer at PIC, said the results of the polling show the bulk annuity market was now established as a £50bn 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 £60bn,” Magudia said.
PIC also found 57% of those it recently polled believe surplus should only be returned to the sponsor after buyout. Just 3% thought that trustees should give the surplus to the sponsor and re-risk the pension scheme to make up the difference.
The 140 individuals also responded to a question on the biggest impact on pricing levels in the next 12 months. About half (52%) believed the biggest impact to come from more large transactions taking up capacity. A quarter expects new entrants to the market to create an impact, 18% citing funded reinsurance, and 5% Solvency UK.
The biggest barriers to new market entrants were considered, with 63% citing track record with trustees. Asset sourcing capability (16%), and pricing capability (13%) fell behind in comparison.
