The UK’s pension risk transfer market is set for another heavy year of activity in 2026, with WTW forecasting that de‑risking volumes will edge higher than in 2025 as more large defined benefit (DB) schemes move to lock in improved funding positions.
In its latest De‑risking report, WTW projects that total pension risk transferred to insurers and reinsurers could reach around £70 billion in 2026, roughly 15% above what it describes as already high volumes in 2025. The firm expects the bulk annuity market alone to exceed £50 billion, driven by larger deal sizes and what it sees as still‑attractive pricing.
Longevity swap volumes of up to £20 billion are also anticipated by WTW, with larger schemes expected to dominate but growing interest reported from schemes of all sizes, either to support run‑on strategies or to hedge a key component of future bulk annuity pricing.
“The risk transfer market is entering 2026 with strong momentum,” said Gemma Millington, senior pensions risk transfer director at WTW. “Schemes continue to benefit from improved funding levels and strong insurer appetite, which together create very favourable conditions in which to secure members’ benefits at compelling prices. We expect this window to remain open through 2026, but trustees will need to be prepared and strategic to take full advantage."
Competition, PRA scrutiny and Solvency UK
WTW described UK bulk annuity market competition as “exceptionally strong”, with multiple major writers and newer entrants active. It noted that additional scrutiny from the Prudential Regulation Authority (PRA) over funded reinsurance models may create pricing headwinds for some providers, as the regulator probes how annuity writers use funded reinsurance for asset sourcing and capital relief, and the associated counterparty and concentration risks.
Even so, the firm expects only limited impact on overall market dynamics, citing the breadth of insurer capacity and scope to adjust asset strategies.
Market participants are also watching the UK’s reforms to Solvency II, or Solvency UK, which are intended to support long‑term investment and annuity business by freeing up some capital and broadening investment options. WTW and other advisers see these changes as potentially underpinning insurer capacity and appetite for DB de‑risking, although the direct impact on volumes remains to be tested.
Superfunds, new solutions and M&A
Beyond bulk annuities and swaps, WTW is forecasting a pick‑up in alternative risk transfer in 2026, including the UK’s still‑nascent superfund market. The firm expects two new entrants over the year and a doubling in the number of completed superfund transactions to date, albeit from a low base, given the limited activity seen so far under The Pensions Regulator’s bespoke framework.
WTW also anticipates at least one entirely new risk transfer structure emerging in 2026, as schemes look for additional options to manage residual risks or delay a move to full buyout.
On the corporate side, several high‑profile acquisitions of UK life insurers by overseas investors are expected by WTW to complete in the first half of 2026. The firm argues these deals are unlikely to materially affect overall market functioning or capacity, but says trustees should factor ownership changes into due diligence and remain alert to any short‑term operational disruption.
Cyber and operational pressure shape insurer selection
Cyber resilience is increasingly influencing which insurers trustees choose. The UK government’s Cyber Security Breaches Survey 2024 found that “50% of businesses and around a third of charities (32%)” experienced some form of cyber breach or attack in the previous 12 months, with higher rates among larger organisations.
“Cyber security has become an important measure of member protection, not just an operational concern,” said Millington. “Trustees are rightly demanding evidence of strong controls and clear response frameworks. Insurers who can demonstrate excellence in this area will stand out in 2026.”
Global risk rankings similarly place cyber incidents – from ransomware to IT outages – at or near the top of business leaders’ concerns.
At the same time, WTW expects operational capacity to remain a pressure point as more schemes move from buy‑in to buyout. The firm said insurers are being pushed to take on more data cleansing work and to offer solutions to accelerate GMP equalisation, with queues for transitions growing and resource constraints at both insurers and administrators increasingly influencing trustees’ choice of partner.
