The bulk purchase annuity (BPA) market in the UK is expected to exceed £50bn in 2026, as trustees navigate a growing range of de-risking options amid regulatory reform and strong funding levels, according to Standard Life.

However, Standard Life managing director for BPA and individual retirement, Claire Altman, warned that the year ahead would represent a “strategic crossroads” for trustees, shaped as much by choice as by transaction volumes.

She argued that the increasing sophistication of the BPA market was giving trustees greater flexibility over how far to go on their de-risking journeys, particularly where schemes are running funding surpluses.

“The market is now rich with options, both in terms of providers and structures,” Altman said.

“As a result, 2026 is likely to be a year where success is defined not just by timing, but by the quality of strategic decision-making.”

Central to the debate is the government’s proposed Pension Schemes Bill, which would introduce reforms to unlock defined benefit (DB) scheme surpluses to support member outcomes and wider economic growth.

However, trustee sentiment remains mixed. Standard Life research showed that around two-fifths of trustees remained uncomfortable with the proposed changes, reflecting concern about governance, regulatory clarity and the appropriate use of surplus.

Altman warned that schemes choosing to delay action until surplus extraction regulations were finalised could face material risks.

“There is jeopardy in waiting,” she said. “Schemes may miss the opportunity to transact if pricing shifts or funding levels deteriorate in the meantime.”

She added that trustee views on the use of surplus were evenly split, with 38 per cent favouring benefit enhancements and a similar proportion supporting measures such as business investment or reduced employer contributions.

This, she said, underscored the need for bespoke solutions and careful alignment between the trustee's and the sponsor's objectives.

However, despite ongoing regulatory uncertainty, Altman expected trustees to continue favouring insurance-based solutions in 2026.

Standard Life research found that 48 per cent of DB schemes identified buy-in as their preferred endgame strategy, with 40 per cent of those planning to approach an insurer within the next 12 months.

Strong funding positions were helping to drive this momentum, with around 45 per cent of schemes now fully funded or in surplus.

“Buy-in is increasingly viewed not just as a tactical step, but as a strategic solution that delivers long-term certainty and security for members,” Altman noted.

Meanwhile, the expansion of the BPA market in 2025 led to transactions attracting bids from as many as nine insurers, driving competitive pricing.

Altman expected this intensity to continue into at least the first half of 2026.

However, she suggested that as pricing remained attractive, schemes in surplus were increasingly looking beyond cost alone.

Indeed, trustees were placing greater emphasis on insurer capability, operational readiness and the ability to move efficiently from buy-in to buyout.

The number of buy-in transactions awaiting conversion to buyout rose from fewer than 100 to around 250 between 2023 and 2024, increasing execution pressure across the market.

“Trustees want certainty of outcome,” Altman said. “Insurers that can demonstrate a clear, efficient path to full settlement are in particularly high demand.”

Altman concluded that trustees entering 2026 faced a market defined by both opportunity and complexity.

“With strong funding levels, evolving regulation and heightened competition among insurers, the ability to act decisively and strategically has never been more important,” she warned.

“Securing good pricing matters, but long-term success will depend on choosing the right partners - those able to innovate, collaborate and support schemes in navigating regulatory change while delivering strong outcomes for members.”

This article was first published on our sister website, Pensions Age.

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