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The value of assets offloaded to insurers by UK companies fell to a three-year low last year, with the market slowing just as big US private capital groups enter the sector.

Insurers bought up about £40bn of assets through pension “buyout” deals completed last year, according to preliminary estimates from consultancies LCP and Mercer, down from £48bn in 2024 and £49bn in 2023. 

Deal volumes fell as the UK government tabled plans to make it easier for companies to extract excess funds from their defined-benefit schemes, which pay pensioners a guaranteed income based on their salary before they retire.

In buyout transactions, companies pay insurers to take on the assets in their defined-benefit schemes as well as the obligation to pay members’ pensions. Insurers profit by keeping any investment returns in excess of the cost of paying pensioners.

The deals have become attractive to large companies as a way of removing pension liabilities from their balance sheets, with large groups such as carmaker Ford and NatWest offloading their UK schemes in recent years — a trend that slowed last year.

“Some of the largest schemes are pausing and assessing options when they would have been on a default to buyout,” said Andrew Ward, partner at Mercer. However, the “vast majority” of smaller and midsize schemes would “probably still go down the buyout route”, he added. 

Dramatically improved funding levels of DB schemes, driven by a surge in government borrowing costs in 2022, have put more pension schemes in a position to move to buyout, prompting fierce competition among insurers and drawing North American players into the market. 

In July, Apollo-backed insurer Athora announced plans to buy Pensions Insurance Company, while Brookfield agreed a £2.4bn deal for life insurer Just Group. 

In December, Utmost Group announced the sale of its life and pensions business to US-based JAB Insurance, whose parent group owns consumer brands such as Pret A Manger.

But some trustees are now rethinking whether to sell their defined-benefit schemes, considering whether they can instead retain them and share more surplus assets with members and their employers. That strategy is expected to be made easier by a government plan to legislate this year to make it easier for companies to access surpluses in their pension schemes.

“For larger schemes with a strong sponsor, we’ll see some that want to run on for a period of time to generate additional surplus to enhance benefits and share some surplus with a sponsor,” said Ian Aley, head of WTW’s pension risk transfer team.

The slowdown in deal volume was reflected in results published by Just Group this week, where buyout volumes declined 28 per cent year-on-year to £3.1bn. Buyouts by Aviva, another of the largest players in the market, shrank 36 per cent year-on-year in the third quarter of 2025 to £3.9bn.

Analysts say the decline is partly down to the lumpy nature of the deals, with fewer blockbuster transactions in 2025 than in the previous two years. Despite the fall in deal value, Mercer estimated that there were a record 350 buyouts last year as smaller buyouts continued.

WTW’s Aley said he expected 2026 bulk annuity deals to “probably revert to where we were in previous years” owing to a strong pipeline of transactions, estimating deal volumes of around £50bn this year.

Most companies still have the goal of selling their DB schemes to an insurer, according to pensions consultants. But some large groups — including asset managers Schroders and Aberdeen — have said they would keep their schemes, aiming to use the surplus to pay employer pension contributions into their defined contribution funds. 

Companies are also looking closely at a deal made by Stagecoach with Aberdeen last year where the asset manager took over as the “sponsoring employer” of the bus company’s scheme, with the aim of growing the surplus and sharing it with members of the pension scheme.