Private sector defined benefit (DB) and hybrid (DBH) pension schemes increased their insurance policy assets by £9bn (6 per cent) to £172bn in the six months to 31 March 2025, despite an overall decline in the market value of DBH schemes, according to the latest figures from the Office for National Statistics (ONS).

The total market value of private sector DBH schemes decreased by £80bn (7 per cent) to £1,103bn from £1,183bn, with declines across most asset classes, except for insurance policies and short-term debt securities.

The ONS highlighted that UK 10-year gilt yields rose from 3.99 per cent to 4.66 per cent over the period, weighing on bond valuations.

However, the ONS cautioned that the figures can be volatile, as a scheme moving from a buy-in to a full buyout would see its insurance policy assets reduce to zero, with the assets transferred to the insurer.

It found that the value of DBH pension scheme assets decreased by £73bn (5 per cent) between 30 September 2024 and 31 March 2025. The main reason for this decrease was a £50bn fall in the value of direct investments, most of which came from a fall in the value of long-term debt securities, particularly central government bonds.

In contrast, the combined assets of private sector defined contribution (DC) and public sector DBH schemes increased 2 per cent to £868bn, supported by growth in direct investments, though this was partly offset by falls in pooled investment vehicles.

The new figures follow the ONS’s previous update, which showed that insurance policy assets had already reached a record high by the end of September 2024, even as the overall market value of DBH schemes declined.

Broadstone actuarial director, Mark Channon, said the statistics highlight just how active the insurance de-risking market has become.

He noted that many DB schemes are now in a stronger funding position, enabling them to lock in significant volumes of buy-ins and longevity swaps in recent years.

Channon added that the data also illustrates the journey many trustees take:

“Schemes will often first secure a buy-in as a de-risking step, with the intention of moving later to a full buy-out and ultimately winding up the scheme.”

He cautioned that while the recent surge in insurance policy assets reflects this first stage of activity, the trend could reverse over time as more schemes complete the transition to buyout.

However, he emphasised that this will not happen overnight.

“The pipeline of schemes preparing to enter the market for a buy-in remains extremely strong, and we expect high volumes of transactions to continue for many years,” Channon said.

Meanwhile, the ONS concluded that the rise in insurance assets reflects both pension schemes’ and insurers’ continued appetite for risk transfer transactions as part of long-term funding and de-risking strategies.

---