Almost two-thirds (65%) of assets held by annuity providers were invested in the UK in 2023, new data from the Association of British Insurers has revealed.
The ABI’s ‘Powering UK Growth Through Pensions’ report found £178 billion of assets held by firms providing bulk and individual annuities were invested in the UK, with a large proportion channelled into housing and infrastructure, including regeneration projects, renewable energy and social housing.
In contrast, defined benefit pension schemes invested 55% of total assets in the UK economy.
The ABI said the bulk annuity market is set to drive even more investment into the UK as it continues to expand, with de-risking transactions with DB pension schemes totalling £47 billion in 2024, covering 341,000 people.
The trade association said the Government’s initial steps to deliver the conditions for increased UK investment have been encouraging, particularly the establishment of the National Wealth Fund and the creation of the infrastructure strategy. However, it urged the Government to “double down” and make the UK an even more attractive target for investors, both domestic and abroad.
This includes delivering on its industrial strategy; ensuring that the UK’s policy, regulatory and tax framework are reasonably predictable; encouraging initiatives that ‘crowd-in’ private investment; and driving forward pension reform which focuses on delivering value to customers.
Yvonne Braun, director of policy, long-term savings, health and protection at the ABI, said: “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.”
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