Growing insurer capacity and a strong pipeline of insurance transactions are expected to result in £550bn of buy-ins over the next decade, according to analysis from LCP, with the recent trend of "fierce competition" driving record pricing levels set to continue.

The report confirmed that defined benefit (DB) schemes remain at record funding levels, as 45 per cent of schemes (approximately 2,250) are now estimated to be fully funded on buyout.

Further improvements are also expected in future, as LCP suggested that this figure will rise to around 80 per cent within five years.

These funding improvements have led to "strong and sustained" demand for insurance, as, despite the widening endgame options available, demand for buy-ins remains strong, with LCP predicting a continued healthy pipeline of £350bn to £550bn of buy-ins over the next decade.

What's more, it said that the true level of activity is masked by higher yields, estimating that, if restated at 2020 gilt yields, the upper end of the projected pipeline would exceed £1,000bn.

And insurers are "upping their game" to match this demand, as LCP estimated that insurer capacity could stretch up to £70bn in 2026, comfortably supporting projected demand of £40bn to £55bn.

In particular, LCP said that capacity will be boosted by the acquisitions of Just and Pension Insurance Corporation (PIC) and strategic partnerships such as L&G’s with Blackstone, which should help sustain long-term competition and attractive pricing.

“Insurers have been upping their game over 2025. Fierce competition drove record pricing levels, a trend we expect to continue into 2026 as insurer appetite and capacity reach new highs," LCP partner, Charlie Finch, commented.

"While endgame innovation continues apace, demand for the insurance route remains strong – as demonstrated by the £4bn+ buy-ins completed by the Rolls-Royce and Ford schemes in recent months."

However, there is an emerging buyout 'bottleneck' that needs to be addressed, as LCP noted that the post-transaction process has come into sharp focus with the number of schemes moving to buyout forecast to be over 250 next year – up from just 15 in 2021.

Insurers have grown their post-transaction teams by 145 per cent in the past three years to handle this workload.

But some issues remain, with guaranteed minimum pension (GMP) equalisation and other data correction activities cited as the biggest blocker to a timely buy-in to buy-out transition.

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