Pension Risk Transfer Webcast 2026

So what will we be covering today? Firstly, I'm going to start with a look back on some of the numbers that defined the risk transfer market in 2025. My colleague, Tom Ashworth, then interviews Lynne Rawcliffe, a trustee director at LawDeb, to explore the critical insurer selection decision.

Following this, Remi Warren, alongside Shona Davies, who's head of transactions at Rothesay, will share their thoughts on how to ensure a smooth transition to buyout. We've then got Ryan McKenna and Bina Mistry to consider some of the alternative risk transfer solutions that are now available to schemes. And then last but absolutely not least, Dave Costello will look at what we can expect from the market over the rest of 2026.

So, kicking straight off with a look back to the risk transfer market over the last year, overall, it was defined by choice and activity across schemes of all sizes and across both bulk annuities and longevity swaps. And we project that just under 60 billion pounds of risk was transferred in total, which makes it rival 2023 as the biggest ever year in the market. So if we look into this a little bit deeper and focus on the purple bars, which represent the bulk annuity market, so of the 60 billion risk transfer, 40 billion of this related to bulk annuities, which is a massive number by any measure.

But actually, if you look at the chart on screen which tracks the volume of risk transfer since 2020, you can see that 2025 was a little bit lower in volume than the prior two years. And that's despite the fact that over 2025, we saw a record number of deals done, with over 350 transactions completed. And that is obviously a very large number.

It was bigger than the almost 300 we saw in 2024 and over 150% more than we saw at the turn of the decade. So combining these stats, it's evident that the average deal size in 2025 was lower than each of the two prior years. An evidence of this is the six deals that we saw last year of over 1 billion pounds compared to 14 deals over that size in the prior year. And that's potentially the result of some larger schemes pausing activity to reevaluate their end game in light of the pension schemes bill proposals on surplus sharing.

2025 was also notable for the very high levels of competition on deals of all sizes, driven by a record 11 insurers in the market. And in particular, we saw more insurers than ever actively participating in the sub-50 million space, which was really welcome news for smaller schemes, who in previous years have had limited choice of provider. And it was that competitive landscape that was one driver of the very attractive pricing that we saw for buy-ins last year, and factors in that as well were also low reinsurance costs for longevity risk and strategic shifts in insurer asset strategies to move away from low yielding corporate bonds into more private placements of illiquid assets.

As you can see from the graph, and this shows the typical yield on a buy in relative to gilts for a scheme with an equal split between pensioners and non-pensioners, the pricing over the second half of the year was consistently attractive and only surpassed in recent times by that around the time of the LDI crisis, which was a much shorter-lived pricing peak. So that's the bulk annuity market, but that's only part or, more precisely, 2/3 of the picture, with the other third of market activity coming in relation to longevity swaps.

We saw just shy of 20 billion pounds of liabilities hedged across six transactions that ranged in size from about 700 pounds million to 6 billion, and we were really thrilled to have led the advice on five of those six deals. And in doing so, we surpassed the milestone of having led advice on over 100 billion pounds of longevity risk transfer since market inception in 2009, something we're really, really proud of.

So mirroring some of the themes that I just mentioned in the bulk annuity market, stand out features of the longevity market last year included, again, a highly competitive landscape with 12 reinsurers currently vying for business, which helped to drive exceptional pricing in this market as well, with reinsurer fees less than half of the levels they were five years ago. So finally, whilst the market was dominated by the established risk transfer options of bulk annuities and longevity swaps, if you can see the dark purple line at the top of the bar for '25, we did see another superfund transaction completing in 2025 for the Church Mission Society, the fourth in total in this market since 2023.

We were also delighted to have helped Aberdeen to complete the first ever so-called sponsor swap, a really innovative transaction under which Aberdeen took on sponsorship of the Stagecoach pension scheme game from Stagecoach. So I think the one word I would use to describe '25 was competitive, and that brings us on nicely to a pre-recorded interview between Tom Ashworth and Lynne Rawcliffe, LawDeb, to explore the important and critical insurer selection decision.

TOM ASHWORTH: Hi, Lynne. Thanks for joining us to discuss how trustees can select the right insurer for their scheme. So today, schemes go into market.

They're generally looking to ensure all members. They have a desire to buy out in the short term and often strong funding levels, often with a surplus. So in a competitive market, trustees need to look well beyond headline pricing when selecting an insurer. So perhaps, if I can ask you to generalize for a moment, price aside, what are the top things you're seeing trustee boards focus on during insurer selection?

LYNNE RAWCLIFFE: Yeah, hi, Tom. It's good to be here. Generally speaking, I think the first thing is making sure that any bespoke benefits are covered. So if you offer bridging pension options, pension increase exchanges, independent advice at retirement as some examples, and they are important to members, I think not all insurers are willing or necessarily able to offer them. So that tends to be at the very top of the list to consider first.

Second, I would say member experience, by which I mean that digital offering, the telephone helplines, general admin services, all of which are way more important than they used to be because of the fact that buy-ins now and ultimately after buyout, you have deferred members who have not yet decided how to use their benefits. So we want to give them a good experience. And then lastly, I think the transition from buy-in to buyout can vary quite a lot between insurers at the moment. So if that is something that you need to keep control of, whether you want to do it quickly or it's just about how it's done, then that would be another differentiating factor.

TOM ASHWORTH: Great. Thanks, Lynne. And I think that first point really being crystal clear up front about what are your red flags really helps the insurers focus on what matters to you.

On a case for a recent small scheme, we had quite an unusual benefit that's not typically offered at that size. So we raised it early on with insurers. One insurer immediately declined.

That's fine, there was no time wasted from either party, whilst another, given the strength of feeling of the trustees for this particular benefit, spoke with our operations team and actually agreed to include that non-standard feature. I guess moving on, trustees-- they have a lot of choice. Can you share some thoughts on how trustee boards can go about navigating their options and making informed decisions, reflecting the views of the whole board?

LYNNE RAWCLIFFE: Yeah, I mean, I think it starts with agreeing as a board and also with your sponsor what your objectives are, as we've just discussed, getting input from advisors like yourselves, who know the insurer as well from regular meetings, know what they can offer, what their strengths are, and also what developments they might have coming up because insurers, I think, are evolving because of the fact that a lot of these buy-ins now include deferred members. I think making sure that all trustees have a voice as well-- so if you need to encourage input, maybe doing some of anonymous survey can be useful rather than just relying on a discussion in a meeting.

I think often, you do see sponsors and trustees, then, can be quite aligned on what they're looking for from an insurer. When you get to a short list of insurers, absolutely essential, in my view, that you do meet the insurers face to face to really delve into some of the key differences that might be there between them and what they can offer. Also being able to chat face to face, I think you tend to end up with more questions from the whole board. And understand also maybe whether they fit with the culture of the sponsor and the scheme and the members, and would be a good long term partner for your arrangement.

TOM ASHWORTH: Thanks, Lynne. And you're right. Insurers' propositions are evolving, and we spend an awful lot of time researching and maintaining our deep dives into insurer capabilities in this area.

And when we step through those, I think they really help flush out some of the differences between the insurers but also, importantly, ensure everyone considers the full end to end experience for members. You mentioned sponsors there. Perhaps a question-- how do you navigate the dynamic with sponsors perhaps when there's a difference of opinion? Let's say the trustees' choice isn't the best headline price, and we may have a sponsor worried about future contributions.

LYNNE RAWCLIFFE: I think it's important that your sponsor goes on the journey for buy-in and buyout, along with the trustees. So I would always have a joint working group so that you've got good lines of communication along the way to discuss any issues that might arise. That would start with training that can be given to both trustees and sponsor about the entire journey, making sure that all stakeholders are aware of some of the key issues and decisions that there might be, and in particular, things like the fact that we mitigate and try and reduce any residual risks that might be there post-buyout.

But ultimately, a company will have some residual risk and agreeing how they might want to manage that is also really helpful upfront. We mentioned buy-in premium pricing. That's not the headline anymore.

I think I couldn't agree more because when you think about costs, it's not just about that initial buying premium. It's about costs to buy-out if that is the ultimate goal for the trustees and the sponsor. So I think taking that into account can mean the trustee reasons for why you don't want the best premium price could be aligned with sponsor objectives as well if it gets you to buyout earlier, for example But I think having taken the sponsor along the journey with you, hopefully, they'll also understand if there are things that are really important to look after the members that they'll also potentially be prepared to compromise if that's needed. But yeah, I just think the communication lines are the most important thing.

TOM ASHWORTH: Great. Thanks, Lynne. And yeah, it reminds me of the deal we worked on fairly recently as well where the company actually met the insurer directly so the insurer could hear company objectives firsthand and allow for these in the proposition.

And also, the company could really understand the differences between the providers as well. So when it came to the trustees' choice of preferred insurer, everyone was fully informed and helpfully aligned. Yeah, so, thank you, Lynne. I think with stronger funding positions and that strong competition, trustees really do now have the opportunity and the obligation to look far beyond price when selecting an insurer.

GEMMA MILLINGTON: Thank you so much to Tom and Lynne. Yeah, I think just to pick up on a few themes from that video, ultimately, the insurer selection decision can only be made once, and scheme members could be policyholders of that insurer for decades into the future. So it is really, really important to make sure that decision making focuses on the trustees' priorities for its members.

One of the areas that Lynne picked up on as increasingly important to trustees is moving efficiently to buyout. And in a second, I'll play an interview that Remi Warren recorded with Shona Davies of Rothesay, following which, Remi will be giving his top tips to ease the path through to buyout and wind up. But before I do that, I just wanted to quickly contextualize this issue.

I mentioned earlier the significant ramp up in buy-in volumes in recent years, and in total, we estimate there are now nearly 1,000 schemes that are fully bought in. And this is in comparison to just over 100 schemes that moved to buyout over 2024. So if you think that most schemes are probably targeting buyout in around 2 to 4 years from buy-in, it's clear that the pace of activity really does need to increase.

And I think both insurers and schemes and trustees have an obligation in this regard. So to explore this topic in more detail, I will pass to Remi and Shona.

REMI WARREN: Hi, Shona. Thanks so much for chatting with me today. I think it's becoming increasingly clear to everyone that their buy-in to buyout stages is becoming a critical step on the journey to wind up. Very keen to get the insurance perspective on this and so suggest I kind of jump straight in. What's the number one thing that really differentiates a smooth transition from buy-in to buyout from one that becomes slow or difficult?

SHONA DAVIES: The number one thing-- OK, I would say realistic expectations of all parties involved. The trustees, sponsor, everyone needs to understand what is involved in terms of data cleanse and getting through right through to buyout and what they're signing their administrator up to. Have they got budgets in place?

Have they discussed it with them? Can they resource it? All these things and having a plan with milestones to tick through, understand all the dependencies in that plan. If x goes wrong or is delayed, how does that impact y further down the line?

And that enables everyone to adapt and react to any challenges that crop up. Having realistic expectations right at the start and everyone understanding what's being signed up to inevitably sets the tone for how smooth the transition will go and allows everyone to cope with when things do inevitably go, go a little bit wrong. So that's the number one. There's other stuff around the edges, but for me, that's the number one.

REMI WARREN: I wouldn't disagree with that. The focus can quite often just be solely on data cleansing and data, but there are so many parts that kind of need to be built into that plan to give you that holistic view, to really make sure that that whole journey is a success. I guess I've teed myself up, but if we do dig into data cleanse, schemes often get stuck in a repeated cycle of data review. Could they do more? What could they do more to get this right first time?

SHONA DAVIES: Yeah, definitely. It's without a doubt the biggest drain on time which I think could be avoided. I think I'd call it three things.

The first one is to really lean on your insurer and ask them lots of questions throughout. Test things with them. Is this data format OK?

Is this change to the benefit spec suitable? Can you insure It? Have we dealt with this transaction in the right way?

And ask those questions all throughout so that when you deliver something to the insurer, there aren't any surprises. They understand what you've done and everything is laid out how they would expect. The ones where it can get into that horrible cycle of multiple iterations are often the ones that it's been kind of the zero visibility on the data cleanse process so far.

And then when it lands at the insurer, it's just not what they need. So number one is lean on your insurer. And the second one I would suggest and something that we are talking to new clients about is to get an independent review of the data piece. Once that has been done by the administrator and all pulled together and ready to go, before you pass it on to the insurer, get an independent review by an actuary, I would suggest, to just basically have a fresh pair of eyes on it.

Does it all stac? Up. Is there anything that jumps out? And by using an actuary as well, it means you're putting the same lens on it that the insurer is going to look at it and it will just flush out any issues and allow you to correct them before you send it over to the insurer.

And the third point I'd make is not to rush. There will be a deadline, of course. There always is. But if that deadline is not looking possible, don't rush to finish and deliver something that's not up to scratch.

Have an open conversation with the insurer about we've got these things remaining. We have a plan in place to get them done, and we need this X amount of extra time. And I would expect most insurers to be comfortable with that if that's discussed up front rather than them rushing to deliver something that ultimately will probably get sent back. So there would be my three things.

REMI WARREN: Yes, it's an age-old saying for a reason, but collaboration really is key, especially across all stakeholders during this cleanse to be a success. If we, I guess, kind of just pivot a little bit to the insurer role, we're seeing trustees and sponsors increasingly place emphasis on non-price factors when selecting an insurer and particularly considering the level of support that can be provided during buy-in and buyout, I know as kind of Lynne mentioned. What things are you finding yourself being asked for and do you like of being asked these questions upfront?

SHONA DAVIES: Oh, well, I love it because I think it's a sign of clear engagement from the client if they are asking-- they have a plan in place. They're clear on their objectives.

We might not be able to do everything they're asking, but at least you know that they are motivated, and we'll do our best to adapt and see what we can do. But it's knowing upfront what's wanted. It's what's always difficult. And going back to your first point about what differentiates good and bad, if you get halfway through a transition and the goalposts change, it's harder. It's not going to be as smooth. Whereas if all these discussions are had upfront, everyone understands what needs to happen.

And I think, of course, it's inevitable that it's such a busy marketplace right now. There's so much in transition that's trying to get to buy out across the market, all the insurers, that in order to get those things done, there's a finite resource of administration within the trustee world, that it's inevitable that insurers will be asked to do more. And indeed, we are seeing those types of requests coming through around possible help with cleansing or implementation of cleanse actions, in particular things like GMP equalization, which, I think we are seeing everyone looking for ways to solve that.

REMI WARREN: And I guess do you think the insurance market could offer more support. You've obviously been asked the question, do you think that you guys are able to help in this space more than perhaps is kind of ongoing at this point in time.

SHONA DAVIES: Yeah, I mean, I think we are seeing it happen already, and [INAUDIBLE] has a few cases where we're doing we're doing more than traditional. And I think it's just about structuring it in the right way that works for everyone. There'll be costs associated with how things are done, and you've got to think about the member experience as well. So you need to work it through in detail with the client and the client's advisors, but I certainly think that there's opportunity for more things to be done.

REMI WARREN: Clearly, this is something we could talk about all day, and I'm very conscious of time. So I'm going to say thank you so much for your insights, Shona. I'm sure we'll very much continue working closely together as schemes continue to navigate this space over the coming years.

SHONA DAVIES: Thanks for having me.

REMI WARREN: Thanks again to Shona for taking the time to join us for that Q&A. It was really great to speak to her and, I think, really helpful to hear the insurer's perspective on the buy-in to buyout stage. So you've heard from the insurers, but what are our top tips to have a smooth, efficient buyout journey?

Number one, start your data strategy early. Ultimately, the journey to buyout begins before you've even secured a buy-in. A lot of the heavy lifting of the data cleanse can be done upfront, and that can help ease the pressure on the transaction phase.

Now, there's a balance between getting your data perfect and locking in pricing when it becomes affordable for the scheme. But for those schemes that are not quite ready to transact, improving data quality is probably the single best way to boosting true engagement and smooth the road to buyout. For those data cleanses taking place post buy-in, the one key element is to make sure that you sequence your data cleansing work in a logical order and avoid the need to do any rework.

Number two, prioritize the three Cs-- collaboration, communication, and coordination. This stage of your project is going to involve your trustees, your sponsors, insurers, and advisors. And progress is only going to happen when everyone moves together.

You'll want to make use of all resource available. As Shona said, get your actuaries to do initial data checks. Speak to your insurers about have we completed all the actions that are required for the data checks. Use people's specialisms.

And the key to excellent collaboration? Well, that's communication and coordination. Make sure that there are clear timelines.

When you've got multiple open channels of communication, this allows for fast escalation of issues. Ensure that proactive updates are being provided. It stops small problems from becoming big blockers.

And that's especially important when timings and your schedule shift. Insurers are planning their resource for their data reviews, and they're balancing premium calculations. So early communication on any of these schedule changes is critical to ensure you don't get stuck in any sort of queue system.

And number three, assign specialist resource. Now, buyouts and wind ups are inherently complex. There's multiple work streams, stakeholders involved, and there can be no second attempt. You don't get a do over. You have to get it right first time.

And that's why having clear ownership and expert guidance is absolutely essential to make sure everything is kept on track. About this, projects can drift. Timescales extend, and ultimately, it adds costs.

And that's where WTW's dedicated buyout team comes in. Now, we've got extensive experience leading clients through this process, and this team combines project management expertise, wind up and actuarial knowledge, plus transaction specialists. And all of this allows us to ensure successful outcomes to these projects.

The team's been through multiple projects before, and we know the pitfalls to look out for and are able to react quickly to resolve issues. Our team also works closely with all of the insurer's post-transaction teams, which means we understand how processes differ between insurers, and we've fostered a really effective working relationship across the market. And that's not only insurer side but also with a range of advisors and administrators.

Additionally, at WTW, we've got a wide range of expertise to support this entire process, from data cleansing, member communications, and also the sort of broken team of trustee [? run of ?] insurance. So all in all, we were very much a safe pair of hands, experienced pair of hands, and we're there to lead your projects from buy-in to wind up. So, in short, plan your data early, collaborate and communicate, and put expert hands on the wheel. If you follow those three principles, the journey from buy-in to wind up becomes smoother, faster, and more predictable. Back to you, Gemma.

GEMMA MILLINGTON: Great. Thanks, Remi. Some really good practical tips. I'm glad we got you back in the end.

So, for our next session, just pivoting a little bit, I'm delighted to be joined now by two WTW colleagues, Bina Mistry, a senior end game strategist, and Ryan McKenna, a derisking specialist who advised on the first-ever superfund transaction for Sears. And together, they're going to look in more detail at a couple of the alternative solutions that are available to transfer risk and remove it from the sponsor balance sheet.

BINA MISTRY: Thanks, Gemma. So over 2026, we do expect to see more schemes take a broader outlook at alternative end game strategies as a result of a number of factors, which are the pension schemes bill-- so particularly the surplus release and superfund aspects-- stronger funding positions, positive noises from the pensions regulator, and also establish new providers deploying more capital. Over the next 10 minutes or so, Ryan and I will explore how this market is evolving with the types of solutions that ultimately look to trade off a level of risk, albeit all still within the spectrum of being low risk with potential upside reward, which either results in lower costs of transfer, higher member benefits, or higher returns to sponsors, or indeed a combination of all three.

So you might ask yourself, so who do these solutions suit and why explore them. Well, typically, they tend to be when a sponsor and trustees might have initial differences in objectives and are seeking to find a solution that innovates and achieves a win-win for both despite these differences. But of course, as Gemma mentioned, innovation doesn't need to stop at established solutions.

We saw the Aberdeen Stagecoach deal, where the scheme undertook a sponsor swap to keep the run-on solution alive to improve member benefits, and that's against a backdrop of an employer who was keen to exit. But for today, while I can't cover all the endgame options, we are going to focus on superfunds and pension captives, as these being areas we're seeing increasing interest as well as possible alternatives. So, Ryan, shall we start with superfunds?

RYAN MCKENNA: Thanks, Bina. Well, looking at the number of superfund deals over the year, you could be forgiven for thinking there's not much to see here. But if you scratch beneath the surface, it has been a year of significant regulatory and market developments, which has generated much discussion and debate and I think very much puts superfunds in focus for 2026.

And if we first look at the transactions, as Gemma mentioned, we saw one added to the deal tally for superfunds and Clara in 2025 with the Church Mission Society. This transaction, using Clara's connected covenant solution, which retains a link to the sponsor through a contingent guarantee, built on the [INAUDIBLE] the year prior in demonstrating superfunds are viable for schemes with ongoing and even strong sponsors-- so, casting the net much wider than initially thought.

And the Church Mission Society is also the smallest transfer to date at around 50 million. And we are now seeing much stronger interest from across our client base, including schemes of all sizes and covenant strengths to explore superfunds. And that interest has translated into a four-fold increase in the number of our clients actively considering live superfund quotes.

BINA MISTRY: Yes, and I agree, Ryan. There's definitely greater interest from a far broader range of clients looking at superfunds. But we also know there are some particular drivers to that heightened interest as well.

RYAN MCKENNA: Yeah, that's right, and there's three things that I would point to from client discussions. So firstly, that early mover hesitation is definitely starting to ease. There's now more of an established path to transact.

And confidence has also increased with four blueprints for passing the gateway test with, and those are effectively the entry requirements. And that's providing greater clarity. And TPR have also directly provided greater clarity on these.

And market confidence has also been boosted by the pension scheme bill with the permanent regime expected to remove one of the gateway tasks, bringing any scheme below buyout into scope. And lastly, we are also expecting positive pricing momentum into 2026 as TPR updates its technical provisions basis for superfunds. But just taking a step back, it really does feel like innovation is firing on all cylinders. So I'm very interested to see where this market could go.

BINA MISTRY: Yes, and so just taking that point, so the deals to date in superfunds have all been below buyout funding levels and have provided enhanced security compared to the status quo, although still being a level of security below insurance. However, with the regulator setting the tone that superfunds provide a high level of security, the potential market could widen. Sponsors and trustees with a buyout surplus may well consider this as an additional option too if you consider it alongside the forthcoming surplus release regulations.

So what I mean by this, could it be an attractive route for schemes seeking to materially enhance member benefits or enhance the returns to sponsors by sharing the difference between the scheme assets and the superfund pricing levels and then remove the liabilities from the balance sheet? Now, of course, there would be a great deal to work through here, in particular the security differences between superfunds, the status quo, and, of course, insurance. But we knot this might be something that is achievable. And then an extension to this could be combining the ongoing superfund sharing mechanisms. So we know some superfunds are looking at value share models, and that was the type of model that was announced by the TPT last year.

RYAN MCKENNA: Yeah, that's right. So TPT are targeting market entry later this year, and we know there are several others looking closely at the opportunity. But I think ultimately, super funds can only deliver faster, more cost effective settlement than insurance and at scale if a competitive, vibrant market develops. And there are encouraging signs that is starting to happen.

And TPT's proposition is interesting in that it's a run-on superfund in contrast to Clara's bridge-to-buyout model. In addition, a core part of TPT's proposition is the aim of sharing surplus with members at a time when value sharing is increasingly in focus, with Clara similarly starting to offer value sharing variants of its model. And with four transactions to date, they've all been very different.

With additional providers coming into the fold, competition should push the boundaries of innovation and push the boundaries on deal structure, including value sharing features. So while superfunds can provide some of the benefits that I mentioned around faster, more cost effective settlement, for many trustees, their guiding compass will be member security, and that does typically direct them towards the insurance regime.

BINA MISTRY: Yes, and that's where solutions like pensions captives may have a role. So if I come back to the point I made earlier around alignment of objectives, pension captives or similar insurance value share offerings can provide a solution for sponsors looking to continue participating in the profits expected from the scheme but are equally keen not to do so in the trustee framework-- so won't use the run-on route-- or simply can't because the trustees are striving for an insurance only solution. So with the pension captive, essentially, a scheme undertakes a buy-in or buyout transaction with the UK-fronting insurer providing member security.

But then most of the premium and risk, less a fee, is reinsured back onto the sponsor's balance sheet through a captive, allowing it to then invest, in a way, to participate in the economic gains of the scheme. Now, in principle, that all sounds very simple, but pension taxes are complex, and there are a number of challenges to overcome in particular having additional capital to support the collateral requirements of the captive and the risk of future calls of capital. some of that can be alleviated or mitigated through finance options such as surety bonds, but you need to have the collateral security there.

Restricted insurance choice, due to both the limits on appetite and amounts of funded reinsurance, and also the challenging current market conditions with low credit spreads, which limits the matching asset upside opportunity and increases capital requirements if alternative assets are then considered. However, we do see some of these challenges being overcome by other insurance value share structures.

RYAN MCKENNA: Yeah, that's right, Bina. We've seen M&G come to the fore with a solution here that seeks to overcome some of the challenges through its value share BPA, which provides trustees and sponsors with similar benefits as traditional captives but structured very differently. So it leverages M&G or, to be more specific, Prudential's existing infrastructure, including its balance sheet and matching adjustment portfolio, helping to alleviate some of the challenges around traditional captives that you mentioned, in particular the brighter spotlight that is being placed on large funded reinsurance transactions by the PRA and insurers' finite capacity in that regard. However, as with all endgame options, there are trade-offs which trustees and sponsors should consider carefully and with their eyes wide open. Captives will be most suited for schemes and sponsors with quite specific characteristics.

BINA MISTRY: Yes, indeed. And just to highlight what these are, so you'll need a sponsor with a long term view on investments and an appetite to try to participate in profits as well as retaining the risks for the long term. You need a strong balance sheet with the ability to invest capital and future calls on capital if needed, a sponsor with strong governance and the resources available, and ideally, an existing captive champion with the appetite to take on complex projects. And then in terms of the scheme, this most suits a scheme where there might be limited opportunity to access surplus and run-on or through wind up through the rules. So essentially doing something similar or more simplistically through the pensions framework is not possible.

RYAN MCKENNA: Yeah, that's really helpful context on the kinds of situations where these structures can work well. And I guess just to end, with an increasing number of in-game options on the table, Bina, what should trustees and sponsors do to help decide which option is most suitable for them?

BINA MISTRY: OK, well, my takeaway on this would be, first and foremost, set the objectives of what's important to you, then compare how these align between the sponsor and trustees, and then do your homework. And that means assess the spectrum of the solutions against your objective framework, understand the financial business case and how that compares, what it means for member benefits, and also, how would they react to the solution or package that you're considering?

Some solutions through these lenses can easily be dismissed while others clearly might require more analysis. But the other point I really wanted to highlight as well is that whatever the end game option, they all ultimately need collaboration between parties. So surfacing any differences in objectives or views on risk and reward early is absolutely essential in then finding the most appropriate solution.

RYAN MCKENNA: Yeah, absolutely. And just to echo that, building early consensus is really important in the context of the busy insurance market that we've just been hearing about. When it comes to triaging, insurers will be wanting to see alignment and a clear articulation of objectives, including consciously dismissing other alternatives before deploying their scarce resource.

And finally, it's important to remember that setting this strategy isn't a one-off exercise. It clearly evolves as the market continues to innovate. The strategy should be regularly retested to ensure it remains the best way to deliver against the shared objectives.

And I think that takes us to time. So, thanks, Bina. Gemma, back to you.

GEMMA MILLINGTON: Thank you. Thanks both very much. I know we're working with lots of clients looking at solutions such as those mentioned. So it certainly feels the next year or two could be pivotal for alternative derisking markets. So it'll be interesting to see further developments over the coming years.

Now he's been waiting very patiently. So without further ado, I will now pass to Dave Costello for our final session, looking forward to what we can expect over the rest of 2026. Over to you, Dave.

DAVE COSTELLO: Thank you very much, Gemma. Hi, everybody. So at the outset of this webcast, Gemma outlined some of the market highlights from 2025.

We very much expect 2026 to pick up where last year left off. Reflecting the maturity of the risk transfer market, new innovations aside, our predictions for the year ahead are very much build on trends and themes observed over 2025. So with that being said, our first prediction is higher risk transfer volumes of new business than ever before.

We're predicting a busier market than ever before. We estimate record breaking volumes of new business this year, with around 50 billion pounds of bulk annuity transactions and around 20 billion pounds of longevity swap transactions. So that's 70 pounds billion of total risk transfer business transacted over the course of 2026. That's up 15% from 2025.

Relative to last year, we expect much of this growth to come from more larger bulk annuities, and there are already a number of such cases on insurer pipelines. With supply keeping up with demand as a result of new entrants and new investment, we think competition and attractive pricing will continue to be a feature across schemes of all sizes. However, higher market volumes may mean the number of insurers quoting on any particular case are slightly lower than the unusually high participation rates seen in 2025.

Nonetheless, a well-prepared scheme that can clearly articulate its strategy to the insurers has a great opportunity to get good engagement and a good deal on this year. Focusing on pricing very briefly, whilst PRA intervention to limit the use of funded reinsurance or make it less capital efficient could be a potential pricing headwind, it's worth noting that a number of insurers do not currently use funded reinsurance in their asset strategy, and they're still able to price competitively and win new business.

So the market level, we don't expect significant impact of this. Similarly, the current unstable geopolitical environment creates some uncertainty, with shocks in markets potentially affecting all kinds of issues such as insurer solvency, asset availability, and scheme affordability. However, this could go either way, and as we've seen in other periods of market instability, the LDI crisis most recently, pricing opportunities could be created as much as pricing headwinds.

Whilst uncertainty will always be a feature of the market, this highlights the benefit of getting in a position to go to market and react to change as soon as possible, balancing preparation for locking into pricing as soon as possible. We provide pragmatic advice to our clients to support them in knowing how to strike this balance. Our second prediction is a growth in alternative risk transfer options and continued market innovation.

We expect new entrants to the superfund market over 2026 and, along with expected improvements in pricing, anticipate this will drive more deal activity that could see a doubling of total deals completed, i.e., from four to eight. Now, this is still quite low compared to the number of deals in the bulk annuity market, but this could change if and when the current gateway principles are relaxed and more schemes fall within the scope of a superfund solution. As Ryan and Bina discussed, lots of conversations are happening in this area across the industry, and with alternative propositions becoming more credible, these conversations are becoming more focused and more detailed.

Thirdly, while there is understandable interest in the announced acquisitions of Just, PIC, and Utmost and all of which are expected to complete over the next few months, will they substantively change the market? We don't think so, and we anticipate the impact of these insurer acquisitions will be limited. In particular, with Just and PIC continuing to operate under their existing brands, we think we'll see little day-to-day difference. Even the contraction in the market from 11 insurers to 10, following the combination of Blumont and Just, is not likely to substantively change market dynamics.

The biggest risk here is the day-to-day operation-- the biggest risk to day-to-day operations is the disruption and potential cultural shift caused by these acquisitions. However, with careful change management, we're confident that this can be managed to minimize any impact. And for trustees looking at entering into a transaction with one of these insurers, in-depth financial due diligence may be desirable to enable trustees to get comfortable with the support offered by the new owners.

Moving on, as Lynne and Tom discussed, ensuring quality of member experience and long term reliability of administration has been a key focus for trustees for many years, and we very much expect this to continue. However, as an evolution of this, we predict an increased focus on cyber risk will form part of trustees' insurer selection criteria, with cyber increasingly identified by our clients as a key risk to member outcomes. With big organizations such as M&S Co-Op and Jaguar Land Rover hitting the headlines for all the wrong reasons recently, demand for specialist cyber due diligence is increasing, and trustees want insurers to evidence clear and repeatable plans to protect against and respond to cyber attacks.

This risk is particularly acute given developing technology, the increased use of online portals for data transfers and member access, and the increased use of AI in general. Just in case they're listening, we expect our cyber risk colleagues to be very busy during 2026. And finally, as Remi and Shona discussed, buy-in to buyout has been a complicated part of the overall process for a while now, primarily due to resourcing challenges across the industry and queues forming at all stages of the data cleanse and buyout process.

We predict that 2026 will see insurer propositions in this area continuing to develop to take on more of the data cleanse responsibilities from scheme administrators and an increased willingness from insurers to implement GMP equalization on behalf of schemes or even undertake the calculations themselves. With more schemes in surplus, trustees may be willing to spend part of this excess on increasing the confidence associated with the journey to buyout, and insurers seen to respond to this need will stand out more than others. That concludes our predictions for 2026. Back over to you, Gemma.

GEMMA MILLINGTON: Thank you. Yes, certainly sounds like we're going to have a busy year. If we thought 2025 was exciting, roll on '26.

So I think-- let's have a look at the time. We've probably got about eigh or nine minutes now for Q&A. Dave, you're staying on. Welcome back, Ryan.

I can see we've had loads of questions. We'll do our best to get through them, but if we don't, we will follow up afterwards. So similarly, if you have anything else on your mind, do add it to the Q&A and as I say, we can pick that up afterwards if not on this session.

So with that said, let's have a look. Dave, one that pertains to the points you were just making about the busyness of the bulk annuity market in 2026. There's a question about whether that means there's an argument for actually waiting to buy in.

DAVE COSTELLO: Yeah, I think 2025 was unusual in the sense of we got significant engagement on schemes of all sizes, with as many as eight insurers quoting on some deals. We've already seen insurers being more selective at the start of this year but from a very high starting point, processes are still highly competitive.

In relation to small deals, insurers have invested heavily in being able to quote on and write more deals, as evidenced in the rapid increase in the number of deals announced. So we still expect competitive process to be possible for all but maybe very small list of schemes, I think that might have answered your question, Gemma, but my audio has gone as gone awful at my side. Apologies.

GEMMA MILLINGTON: OK, no worries. We can hear Dave, which is the main thing anything. OK, Ryan might be on us then for the rest of this Q&A. You're just-- I'm warning you now.

RYAN MCKENNA: I'm hoping you can hear me, Gemma.

GEMMA MILLINGTON: I can. I can. So I think we've got a few questions actually coming in which are on a theme and all around smaller deal sizes.

So this one in particular asks whether for smaller schemes, there's any realistic option for risk transfer aside from a buy-in. So Ryan, why don't we start with you? What about superfunds? Are they open for business for smaller schemes?

RYAN MCKENNA: Yeah, it's a great question, Gemma. I'm going to start with a very broad generalization. So small schemes potentially have the most to benefit from consolidation, including by superfunds, recognizing the disproportionately higher running costs.

We are seeing access improving on the back of the Church Mission Society transaction that was referenced earlier. We do now have a strong pipeline of smaller schemes that are considering superfunds quite deeply, including live quotes. And as competition starts to heat up, access should continue to expand, and I expect this will be supported by the use of co-mingling models, which pool smaller schemes, reducing provider overheads, and expand reach in a more scalable way.

And the use of this co-mingling approach is proposed by TPT and Clara are also using it as a design feature of its developing small scheme proposition. But generally, the industry has commoditized buy-ins for smaller schemes through the use of streamlined broking processes, contracts, and, to some extent, advice. And this has set a high bar, and over time, I have no doubt some of those learnings will be adopted in the superfund market.

So I guess to summarize, yes is the answer. The sign on the door very much reads open for business. But for now, there is more friction, and that needs to be navigated carefully.

GEMMA MILLINGTON: Great. Thanks, Ryan. I think good news, really, to see the superfund market beginning to accommodate those small deal sizes.

I think the other market that I would probably pick up on in response to that question where we've seen significant developments to open up opportunities for smaller deal sizes is in relation to longevity swaps. So as we saw some time ago on the insurer side, we're seeing reinsurer processes now getting more streamlined so that what was once only viable for very large deals is definitely now much more realistic for smaller transactions. And I think that with obviously run on coming on to the table for more schemes as an end game, I think associated with that, there is some real interest in hedging longevity risks from schemes of all sizes to support that run on strategy.

So in light of that, we're actually launching a streamlined longevity swap solution that's targeted at deal sizes between 100 million and 500 million. And that aims to ensure an efficient and cost effective route to market for schemes of this size. It incorporates competition. So there will still be a choice of insurers. And it also focuses on the post-transaction kind of period and make sure that it incorporates terms that will streamline the ongoing operation of the swap as well.

I think it also probably-- just to highlight on that, it's just like a normal longevity swap in terms of its structuring. It's an insurance contract. So importantly, it can be novated to a buyout in future, which I think is important flexibility whatever your scheme size.

So yeah, I think we're seeing developments, really, is the message across all derisking markets to accommodate smaller schemes. So absolutely not buy-in as the only option. So hopefully, that's good news.

Dave is still out of the equation, I'm afraid. So let's have a look. OK, so this one's about this says choosing an insurer that fits your ethos and has a strong member experience offering is all well and good, but who is there to keep insurers to account post-buyout?

Really, really great question. Obviously, post-buyout, the trustee board no longer has direct oversight of the member experience. But from your perspective, I think you can be reassured that there are safeguards in place.

First of all, commercially, the insurer wants to make sure they can continue to win and write new business. So in order to do that, they really need to make sure that they're demonstrating that consistently strong member experience because otherwise, we spend a lot of time doing research on insurers in this regard. And if they're not delivering, we will be translating that to our clients, and it will factor into future decision making.

I also think there's the comfort that schemes can take from the oversight of the PRA and also the requirements of the consumer duty regime. So hopefully, that gives some reassurance that insurers are going to continue to deliver to your members their policyholders post-buyout. Right, hopefully, we can squeeze in another one or two very quickly. So Ryan, I think this one is definitely in your court. Do you expect to see any more sponsor swap transactions?

RYAN MCKENNA: Yeah, so the Stagecoach Aberdeen deal definitely came about due to the various stakeholders' specific circumstances aligning in that occasion, and we don't expect it to be right for all.

We are, however, seeing real interest from all sides, which may mean there are some more of these types of transactions, though we don't expect them to become mainstream by any means. More broadly, though, I think it very much highlights the opportunities for schemes able to leverage their scale and ultimately shape their in-game solution to meet their own specific objectives and priorities, whether that's run on, buyout, or indeed something in between.

GEMMA MILLINGTON: Great. Thank you, Ryan. It will be really interesting to see, I think, whether we do see some more deals in that space.

Nice and quick answer. So I've got time for a very last quick one, and we've had a question. As there are significantly more schemes transacting a buy-in than moving buy-in to buyout, is there a risk that there will be insufficient resources in the insurance market to move all those schemes to buyout quickly that would want to?

Very pertinent question and definitely something we're keeping an eye on. However, to provide some comfort, our administration survey asked the capacity that insurers have to move schemes to buyout, and summing up across the market, we think there is capacity to move around 300 or more to buyout a year. So hopefully, that does reassure that in totality, the market could keep up with demand.

But it doesn't mean that at an individual insurer level, there may not be capacity issues. So I think asking questions to get to the crux of that as part of your insurer selection will be important. Right, I think we had better close off Q&A there.

Thank you, Ryan. Thank you, Dave. Remains for me to say is thank you so much to everyone for joining us. I hope you enjoyed it and are taking away some useful insights.

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