Price, administrative experience, and transaction timescale flexibility are the top factors driving insurer selection decisions in 2025, according to research carried out by Mercer.

These attributes were followed by ‘financial strength’, ‘brand selection’, and a ‘streamlined approach' as the most attractive to pension schemes seeking an insurance provider.

Notably, environmental, social, and governance (ESG) ranked at the bottom of the list of priorities, below other factors such as price lock flexibility and scheme quirks.
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Speaking at the Mercer UK Pensions Risk Transfer Conference, Mercer partner and head of risk transfer, Andrew Ward, said that while price remained king for many transactions, non-price factors were getting increasing attention.

“Our research showed insurer flexibility, financial strength, brand, price lock, and ability to deal with benefit quirks were all important features," he continued.

“However, the clear winner was the insurer's strong administration offering focused on member experience. In practice, this means having strong service levels, good quality people on the ground answering calls, excellent member communications and high customer satisfaction.”

Alongside this, Mercer revealed survey results on the ‘main challenges’ in the pension risk transfer market for 2025.

Data quality and admin resources were the most popular responses, with other options, attractive pricing, asset sourcing, government policy, and distractions making up the rest of the list.

“Looking forward to some of the wider challenges facing the risk transfer market in 2025 and beyond, respondents were most concerned by data quality and people resource, further highlighting that at its heart, this is a people-business focussed on individual members,” Ward suggested.

“There was recognition of the need to consider alternative options, meet wider regulatory requirements and potential shifts in government policy. Some also highlighted a concern over whether current attractive pricing would persist.”

At the end of Mercer's recent conference, representatives from the ten leading pension insurance companies took to the stage, each having the opportunity to ‘sell’ their services to the audience.

A live survey then asked the audience to vote through their phones on their favourite selling point from the ten companies on stage, with over 100 responses shown on screen.

‘Experience’ topped the list, followed by ‘loyalty’, while other popular attributes included 'member experience’, ‘in-house administration’, and ‘mutuality’.

“As noted in our final session of the day, all ten insurers in the market currently pride themselves on being strong in the most popular areas, so it is important for trustees and scheme sponsors to fully understand where differences in insurer administration offerings may be and which ones are a good fit for their membership,” Ward concluded.

A survey carried out by Legal and General last year also placed ESG as the lowest priority for pension schemes, despite asset owners increasingly investing in sustainable funds, with 65 per cent now incorporating nature and biodiversity into their sustainability strategies.

The findings also follow a paper by Hymans Robertson that stressed the need for schemes to consider non-price factors when assessing buy-in or buyout insurers.

The consultancy said that while cost remained “crucial” for defined benefit (DB) pension scheme trustees assessing options as their schemes reach buyout and wind up, non-price factors, such as administration capability, operational considerations, and insurer’s ESG targets, should also be considered.

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