Almost half (47 per cent) of pension experts expect the bulk annuity market to reach between £50bn and £60bn of transactions next year, according to Pension Insurance Corporation (PIC) research.

The survey also revealed that 45 per cent of respondents thought the bulk annuity market would be between £40bn and £50bn.

In addition to this, PIC found that 57 per cent of respondents felt surpluses should only be returned to the sponsor after buyout, while 3 per cent said that trustees should give the surplus to the sponsor and re-risk the pension scheme to make up the difference.

When asked what the biggest challenges facing new entrants to the bulk annuity market were, 63 per cent said a track record with trustees, 16 per cent said asset sourcing capability, and 13 per cent said pricing capability.

Furthermore, over half (52 per cent) said more large transactions taking up capacity would have the biggest impact on pricing levels in the next 12 months, with 25 per cent suggesting that it would be new entrants to the market.

Meanwhile, 18 per cent of those polled said funded insurance would have the biggest impact on pricing levels in the next 12 months, while 5 per cent said it would be Solvency UK.

Commenting on the results, PIC chief origination officer, Mitul Magudia, said: “As the results of our polling show, the bulk annuity market is now firmly established as a £50bn a year market.

“It’s worth noting that the market volume size range reflects the uncertainty about the timing of larger scheme transactions.

“One or two of these transactions in a year will likely push the market up to £60bn.

“What is more important for PIC, however, is that we continue to offer a whole of market solution, capable of addressing the needs of small schemes right through to the very biggest.”

---