Prior to 2022, most UK pension schemes were underfunded on a buyout basis and it was common for a bulk annuity transaction to cover part of the scheme membership, for example a pensioner buy-in. There was little certainty around if, or when, these buy-ins would be converted to buyout, meaning price was the overriding consideration and there was limited focus on the long-term impact for members.
Following the LDI crisis, scheme funding levels have improved significantly. As a result, full scheme buyins have become much more common and, in many cases, can be afforded with surplus assets left over. This means that whilst price remains important, pension scheme trustees are increasingly prioritising the quality of the future scheme member experience as policyholders of the insurer, beyond the period of trustee governance. We have seen several instances in recent years where trustees have chosen an insurer who was not the lowest priced, instead focusing on what is best for members in the long term.
Trustees increasingly want to do a 'deep-dive' on insurer administration and member experience
What was considered a 'nice to have' only a few years ago has now become an essential part of insurer due diligence for most trustees. Our clients have full access to our detailed research into insurer administration and member experience, covering:
- Administration model and operational resilience
- Quality and accessibility of digital tools
- Service level targets and performance against targets
- Quality of communications
- Governance controls including performance monitoring and continuity plans
Where our research highlights meaningful differences between shortlisted insurers in areas that matter most to trustees, this insight can be used in several ways:
- To inform the final selection: Trustees may factor these differentiators directly into their insurer selection decision
- To drive further due diligence: Trustees might undertake additional scrutiny, such as site visits to administration teams, mystery shopping, or seeking references
- To strengthen negotiations: Insights from the research can be used as leverage in negotiations with a preferred provider, encouraging them to match or exceed the standards set by competitors
Insurers are investing in member experience
As trustees increasingly require insurers to demonstrate a positive member experience, it is unsurprising that our 2025 survey of insurer priorities identified improving the post-buyout member experience as a leading focus for insurers. To meet trustee expectations and to remain competitive, insurers have introduced a range of positive developments aimed at raising service standards and delivering a better experience for members, including:
- Scaling up of resource: Insurers have taken proactive action to ensure they are able to deliver high standards of member service as more schemes transition to buyout. This has included: restructuring and growing existing administration teams; appointing an extra third party administrator to provide additional capacity; and engaging independent third-party resource to meet short-term upticks in activity (for example member quotation requests)
- Changes in administration model: The growing emphasis on member experience has prompted some insurers to fast-track enhancements to their administration services. Others have taken a more transformative approach, developing their administration models from scratch to deliver what they consider to be a best-in-class member service. This approach has been particularly accessible for newer entrants, who are not constrained by legacy systems, while established insurers have also been re-evaluating and updating their existing frameworks. For instance, in 2025, Rothesay introduced its new administration platform, Rothesay One
Improvements in member option terms
While trustees will typically get comfortable that insurer terms are within an acceptable range, some schemes, especially those with a surplus, may wish to offer more favourable factors to their members. Insurers have demonstrated a willingness to provide enhancements such as better than cost neutral member factors, fixed factors and other improvements to terms to ensure members are not disadvantaged following the buyout.
Maintenance of valuable member options
Member options such as cash equivalent transfer values, early and late retirement and trivial commutation are offered as standard. Insurers are increasingly open to insuring additional optionality, such as a bridging pension option (where members may choose to exchange some lifetime pension for a higher temporary pension until their State Pension commences) or pension increase exchange where these are offered within the scheme and are considered by the trustee to be important to members.
Enhanced online offering
All insurers offer basic online functionality to policyholders to facilitate access to policy information and management of their benefits. Of the eleven insurers in the market, seven now also offer advanced digital features, such as instant access to retirement and transfer quotations, while the remaining four are actively developing similar capabilities on varying timelines.
Access to educational support and regulated advice at retirement
Insurers recognise that members may require support through life events and when navigating important financial decisions and routinely signpost relevant materials and resources within communications. Many insurers also offer, or are in the process of developing, bespoke educational content designed to help members make informed choices. One area where clearer differences emerge between insurers is the level of access they provide to regulated financial advice with just one insurer offering as standard (either paid for by members or upfront as part of the buy-in premium). The importance of this will naturally depend on whether advice is already offered within the scheme.
Conclusion
The landscape for insurer selection in the bulk annuity market offers trustees and sponsors a broader range of options and greater negotiating power than ever before. With a record number of active insurers and heightened competition schemes, regardless of size, can now pursue strategies that best align with their unique objectives, whether through competitive or exclusive processes.
As the market continues to mature, the focus is shifting beyond price alone. Trustees are increasingly prioritising the quality of member experience, robust administration, and the long-term security offered by insurers. This holistic approach, supported by detailed research and rigorous due diligence, ensures that decisions are not only commercially sound but also in the best interests of scheme members.
Ultimately, successful insurer selection hinges on clear objectives, transparent processes, and strong engagement with providers. By leveraging market dynamics and maintaining a member-first mindset, trustees can secure optimal outcomes delivering both value and peace of mind for all stakeholders involved.
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