Rosie Fantom, Head of Pension Risk Transfer, explains how BPA Plus combines guaranteed security with the potential to share more value.
Q: What is BPA Plus and how does it work?
RF: BPA Plus provides the secure, guaranteed retirement income trustees would expect from a traditional bulk purchase annuity with the added potential for discretionary cash bonuses. Bonuses are linked to the performance of the assets that Prudential is invested in to support members' benefits.
During buy-in, any bonus is paid to the pension scheme. Trustees can then decide how it should be used, just as they would with other investment returns. Following buyout, any bonus is paid directly to scheme members.
It is important to remember that the members' insured benefits remain guaranteed by Prudential in exactly the same way as a traditional BPA. They are paid in full regardless of asset experience.
Q: What does BPA Plus change about the traditional BPA model?
RF: A traditional BPA has one fundamental purpose: to secure members' hard-earned benefits with an insurer. Under BPA Plus, we go further to share favourable asset experience through annual cash bonuses. Typically, an insurer would retain these funds.
BPA Plus has been designed with the pension scheme member in mind with the aim of producing better customer outcomes. Policyholders can receive some of the benefit of favourable asset experience while safe in the knowledge that their original benefits are guaranteed.
BPA Plus is now our standard proposition for new BPA transactions. The market response has been overwhelming, with transactions totalled £1.7 billion to the end of August 2026, already exceeding the £1.5 billion of our previous traditional BPA proposition transactions across 2025.
£1.7bn
Total BPA Plus transactions to the end of August 2026
£1.5bn
Previous traditional BPA proposition transactions across 2025
£138bn
Scale and financial strength of the With-Profits Fund
Q: Why does Prudential believe the BPA market needs BPA Plus?
RF: Innovation is essential if the market is to continue delivering positive outcomes for members. With more schemes evaluating run-on and the prospect of generating surplus that can be shared with members, BPA Plus presents trustees and sponsors with a compelling alternative to consider. Developed with member outcomes in mind, it has been specifically designed to provide additional value to members, while maintaining the same guaranteed insured benefits as a traditional BPA. This can be particularly appealing at a time when high inflation and cost of living pressures may have significantly eroded the purchasing power of their benefits.
Whilst Prudential helped to establish the BPA market, we do not believe that means simply preserving the model as it is. It gives us a responsibility to help move the market forward.
Q: What enables Prudential to offer BPA Plus?
RF: A proposition like this needs more than a good idea. It needs financial strength, investment expertise, structure capable of supporting long-term guarantees and a real customer ethos.
Prudential are uniquely placed in their ability to power BPA Plus by the scale and financial strength of our £138bn With-Profits Fund ("WPF"). The purpose of the WPF is to write new business and manage risks for the benefit of existing policyholders and shareholders. Where possible, we share good credit experience with BPA Plus policyholders, improving outcomes.
Q: Do schemes have to give up certainty to access the potential bonus?
RF: No. BPA Plus does not exchange certainty for potential upside.
Members' insured benefits remain guaranteed in the same way as a traditional BPA. They are paid in full regardless of asset experience and cannot be reduced.
That is how we believe innovation should work in this market. It builds on the security pension schemes and their members value, rather than asking them to compromise it.
Q: Is the BPA bonus guaranteed?
RF: No. Any bonus is discretionary and is expected to vary year to year, including potentially periods of no bonus. Bonuses depend on the experience on the assets backing the policy, and are purely to give the potential for policyholder upside, which is paid to the trustees during buy-in and directly to in payment policyholders during buyout.
Q: How does the discretionary bonus build up over time and what does that mean for members?
RF: Each year Prudential assesses the experience on the assets backing the BPA Plus policies. Based on this analysis, a discretionary bonus may be declared.
Discretionary bonuses will reflect cumulative credit experience over a longer period each year since inception and are therefore expected to gradually build up over time.
Rosie Fantom
Head of Pension Risk Transfer at M&G
Specialising in bulk purchase annuities, pension risk transfer, and innovative member outcome strategies.
Compliance
Issued by ‘Prudential', which is a trading name of The Prudential Assurance Company Limited, part of M&G plc, and registered in England and Wales. Registered office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 15454. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Prudential Assurance Company Limited is an indirect subsidiary of M&G plc, a company incorporated in the United Kingdom.
