Growing interest in run-on strategies among larger defined benefit pension schemes is creating more favourable buy-out conditions for smaller schemes, according to Zedra.
The firm says fewer large schemes are progressing through the traditional buy-out market as they consider running on for longer, prompting insurers to devote more capacity to smaller transactions.
It notes that insurer competition has increased, with smaller schemes more likely to receive multiple quotations and benefit from improved pricing.
Zedra says smaller schemes have historically struggled to attract sustained insurer interest and have sometimes needed exclusivity agreements to progress a transaction. But it believes the current market is offering greater choice and more competitive pricing than has been available in recent years.
It adds that trustees with buy-out ambitions should assess their readiness, including ensuring member data and benefit specifications are up to date, to take advantage of current market conditions.
Zedra client director Alastair Meeks says: “For smaller schemes considering buy-out, the current market presents a valuable opportunity. Stronger insurer competition is creating greater choice and, in many cases, more attractive pricing than has been available in recent years.
“While every scheme’s circumstances are different, those with buy-out ambitions may find this is an opportune time to assess their readiness, ensure their data and benefit specifications are in good shape, and engage with the market. For schemes seeking the security of buy-out, the current environment may offer a particularly attractive route to safe harbour.”
