New data from the Association of British Insurers (ABI) shows that in 2023, £178 billion (65%) of assets held by participating firms providing bulk and individual annuities were invested in the UK.1
Quantifying the scale of pension investment in the UK, the ABI’s report ‘Powering UK Growth Through Pensions’, sets out how providers invest across Defined Contribution (DC) pensions, bulk annuities (where they insure employers’ defined benefit (DB) pensions), and individual annuities. The report also highlights how to create the conditions for UK investment to increase. Its findings demonstrate the power of both DC providers and annuity insurers as investors in the UK economy.
Much of the £178 billion from bulk and individual annuities investment is channelled into UK housing and infrastructure, including regeneration projects, renewable energy and social housing which, in turn, supports a range of sectors and creates jobs. This considerable contribution compares favourably to an estimated defined benefit (DB) pension scheme investment of 55% of total assets in the UK economy.2
The bulk annuity market is set to drive even more investment into the UK as it continues to expand, with ABI data revealing that de-risking transactions with DB pension schemes totalled £47 billion in 2024, covering 341,000 people .3 This adds to the more than 1.7 million people whose benefits had already been secured by bulk annuity insurers before the start of 2024.4
The ABI’s latest report also sets out how the scale of investment could be increased even further. The Government’s initial steps to deliver the conditions for increased UK investment have been encouraging, especially its establishment of the National Wealth Fund and creating the infrastructure strategy. The ABI argues that the government now needs to double down and make the UK an even better target for investors at home and abroad, by:
- Delivering on its industrial strategy, and executing a long-term economic plan, including proceeding with planning system reform.
- Ensuring that the UK’s policy, regulatory and tax framework are reasonably predictable, to help investors plan with confidence.
- Encouraging initiatives that ‘crowd-in’ private investment, including blended finance solutions such as risk-sharing to help mobilise private investment at greater scale.
- Driving forward pension reform which focuses on delivering value to customers, rather than a fostering a cost-focused culture.
The power of the insurance and long-term savings industry as a major investor in the UK is enormous. Our new data shows a significant UK bias in annuity providers’ investments and, with 2024 another strong year for transactions in the bulk annuity market, more capital will be available for infrastructure projects across the UK.
"We welcome the government’s focus on ensuring this potential is maximised, and our report sets out the practical steps to help enable this.”
Yvonne Braun
Director of Policy, Long-Term Savings, Health and Protection
Footnotes
1. Based on data from annuity providers’ asset allocations (2023). This is the first time this pilot data has been collected by the ABI, and seeks to capture all investments backing annuity business, both individual and bulk annuities. It only covers ABI members as of 2023, and so does not include coverage of the whole market.2. Figures calculated from the Pensions Policy Institute’s 2024 report on Pension scheme assets – how they are invested and how and why they change over time3. ABI new business data which includes data from all BPA market participants, except Utmost who have just entered the market.4. ABI business in force data for bulk annuity transactions. This does not include data from one provider (Legal & General).For more information, please contact the Press Office.