Broadstone have delivers its H1 2025 BPA Market Review which reports on its experiences advising on transactions in the BPA marketed through the first half of the year.
The expectation is that the aggregate premium from de-risking transactions will show a decline in H1 2025. This reflects the usual pattern of larger deals being back-weighted towards the second half of the year as well as specific impacts to this H1 2025. There has been considerable macroeconomic volatility around the scope and impact of President Trump’s tariffs while, in the UK, a number of consultations impacting schemes’ end-game decisions such as run-on and surplus extraction concluded.
This has driven a ‘wait and see’ approach from larger schemes but there remains an active pipeline and the expectation is that £1bn-plus deals will be completed in H2 2025.
It has been business as usual at the smaller end of the market with a significant number of deals being concluded. It demonstrates continued capacity in the insurance market to service these schemes with the growing number of insurers at this end driving competitive pricing.
Chris Rice, Head of Trustee Services at Broadstone, commented: "It has been a half of two halves in the BPA market. At one end, larger schemes are waiting for dust to settle and new regulatory options to be considered before progressing to buy-out. De-risking for smaller schemes continues to accelerate with the number of deals seeming to be keeping pace with growth in recent years. This reflects growing insurer capacity at this end of the market meaning that schemes of all sizes can now look to secure a bulk annuity transaction.
“Looking forward, we would expect smaller schemes to continue to look to the insurance market as new entrants continue to expand their presence and the usual cluster of bigger schemes should complete de-risking deals in the second half of 2025. Some schemes may eschew the insurance market and look to run-on given more fluid access to surpluses and healthier funding conditions. However, we do not expect this to considerably change the dynamics in the BPA market as there are enough Sponsoring Employers looking to remove the burden of their DB pension schemes.”
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