Smaller DB pension schemes considering a bulk annuity transaction have more opportunities and flexibility than ever before, according to a report by Hymans Robertson.
The consultancy firm claims that a growth in innovation from established insurers and rise in the number of providers in the market have rapidly changed the traditional broking dynamic.
As a result, these small schemes are now able to attract greater insurer interest and have increased leverage to negotiate better pricing and commercial terms. It says that small schemes must recognise and embrace this change and approach the transaction with a renewed commercial mindset or they risk “leaving money on the table.”
Iain Church, head of core transactions and risk transfer specialist at Hymans Robertson, says: “We’ve seen more change in the small scheme end of the market in the past few years than in the decade before it.
“Innovation from established providers, combined with the arrival of new market entrants, has reshaped what’s possible. The effect is clear: more competition, more engagement and better outcomes for smaller schemes.”
Church went on to claim that Insurer investment in post transaction processes means some schemes can progress from buy in to buy out in only a few months if data issues are resolved early.
Hymans Robertson’s annual risk transfer report claimed that Clara’s ‘bridge to buy-out’ superfund has become a well-used tool for schemes with distressed or weak sponsor covenants. The consultant also claimed that Clara regularly features on the list of practical ways to secure member benefits and to remove pension liabilities from corporate balance sheets.