The UK defined benefit (DB) pension scheme bulk annuity market is seeing its best pricing for over two years, according to Aon.

The firm said this was being driven by a combination of factors but highlighted ‘increased competition’ as the most significant, with market conditions and heightened volatility providing an investment environment that is enabling attractive insurer pricing.

For schemes that are well-prepared, this pricing level offers opportunity, the firm suggested.

“There are now 11 active insurers and, along with the new entrants to the market, the established firms are expanding their addressable markets to cover schemes of all sizes,” explained Aon risk settlement group partner, Mike Edwards.

“Quite simply, it means there are more insurers than ever before, competing on deals both large and small – and that is driving increasingly competitive pricing,” he continued.

“The first half of 2025 was a period of market volatility - and those are favourable conditions for schemes looking to secure bulk annuities. It’s provided investment opportunities for insurers – and that has flowed through to pricing.

“Many insurers have also adjusted their investment strategies for new business, reflecting both narrower credit spreads and wider gilt spreads. It means that gilts have become a more attractive investment for providers,” he said.

Edwards argued that, with this background, trustees and employers who have been decisive in developing and confirming their endgame strategies – and who have opted for insuring their scheme as a result – have been in a position to capture the best pricing.

“In one sense, there’s nothing new in this,” he continued.

“The benefit of being well-prepared is a market theme we have seen time and again in the last few years.

“But it does emphasise that it’s the schemes which are transaction-ready and able to approach the market with conviction that get the best outcomes for all stakeholders,” concluded Edwards.

The update follows claims last month that the UK’s DB risk transfer market was witnessing a “fundamental transformation”, with insurer supply exceeding demand for the first time in several years.

Hymans Robertson said the change in the market followed a ‘surge’ in transactions for DB pension schemes valued under £100m.

In 2024, the UK bulk annuity market saw a record number of buy-ins, with insurers completing almost 300 transactions and writing more than £47bn of total premiums.

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