The largest actuarial and pension consulting firms in the UK

14 May 2018 6 min. read

UK’s ten largest actuarial and pension consulting firms brought in a combined revenue of almost £2 billion last year. Despite mounting pressure from regulators, Willis Towers Watson, Mercer and Aon Hewitt remained the UK’s largest nationwide actuarial and pension consultancies.

The UK’s collective pensions assets currently total some $3.1 trillion (£2.8 trillion) – making the British pension pot one of the world’s largest, accounting for around 5% of global funds. While the total pension asset pool seems large, however, an ageing population, and the threat of rising unemployment among younger generations mean that the pensions and actuarial sector faces some unique challenges in its rapidly approaching future.

Late in 2017, the UK Government’s auditing body warned that funding for the national state pension could be depleted by as early as 2032. As Britain’s ageing population sees retirement numbers set to boom, and automation threatening as many as a third of jobs across London alone – decreasing the active number of workers making National Insurance Contributions (NICs) contributions – the Government Actuary Department (GAD) suggested that, without a rise in National Insurance Contributions, the country could face a massive pensions deficit – which might only be avoided by a 5% rise in NICs.

The largest actuarial and pension consulting firms in the UK

In this uncertain environment, consulting firms specialising in actuarial and pension advisory work look set to be in high demand, as funds look for ways to consolidate their assets and ensure the security of their members golden years. According to new analysis, the market defined as offering trustee actuarial and administration services currently commands combined revenues of almost £1.9 billion, with that number likely to rise past the £2 billion mark in the near future – while the dominant three firms in the UK pension consulting arena bring in over half of that figure. Due to their dominance in the sector, the trio currently face a competition probe by the Competition and Markets Authority (CMA) – but that news seems to have done little to impact their success.

The Big Three of the UK’s pension and actuarial consulting segment are Willis Towers Watson, Mercer and Aon Hewitt – which hold a total market share of more than £1.1 billion. Of the gang of three, Willis Towers Watson – which saw CFO Roger Millay retire last year – is presently the largest, bringing in £408 million in revenues in 2017; £26 million more than second-placed Mercer – which recently appointed Jo Holden as its new UK investment head. Aon Hewitt meanwhile drew revenues of £328 million – with the firm’s income boosted by the acquisitions of Portus Consulting and Henderson Insurance throughout the year.

Despite a difficult year for the broader Capita group, Capita Employee Benefits – consisting of Capita Employee Benefits Limited and Capita Employee Benefits (Consulting) – still managed to rank next, with revenues in 2017 of £139 million. The firm was followed in fifth place by two firms, Xafinity (including its recently merged Punter Southall Businesses) and JLT Benefit Solutions, which both brought in £110 million in revenues. These were the last firms to break the £100 million threshold.

Beyond the top five, Lane Clark Peacock saw revenues of £88 million, ahead of Hymans Robertson, one of the UK’s oldest actuarial and pension consultancies. Launched in 1921, the firm currently employs 665 staff including 79 partners, and last year saw revenues hit £75 million. Similarly sized Barnett Waddingham, which hosts 633 employees, brought in a similar total of £67 million, closely followed by Punter Southall, which rounded off the top ten with £58 million in revenues.

Beyond the top ten, Xafinity, not including its newest merger, made the grade, collecting revenues of £52 million – narrowly ahead of Buck Consultants – a firm which as of Spring 2018 has regained its independence, and will be keen to put an injection of private equity investment to use growing this figure in the coming year. Finally, First Actuarial drew in £18 million in revenues before the close of 2017.

It is important to note that this analysis does not include advisory services provided by PwC, Deloitte, KPMG and EY – the world’s largest professional services firms. This is because of a lack of segmental information from the Big Four, which would likely lead to their presence being felt on the ranking. It also excludes data from Redington as well as smaller regional firms due to their size making them proportionally less comparable – Redington only employs around 240 staff – and due to the nationwide nature of the analysis.