Small Scheme Annuities: Navigating New Insurance Opportunities

According to Hymans Robertson, the competitive landscape for small scheme bulk annuities is evolving, urging trustees to take a more insightful approach when navigating the insurance sector. The consultancy firm’s recent annual assessment notes that defined benefit pension schemes, with assets as small as £5 million, are garnering interest from several insurers. This indicates that smaller schemes now have enhanced options to engage with insurers effectively in the insurance market.

The report outlines that new market entrants like Royal London and Utmost have shifted their focus toward smaller schemes. Established insurers, such as Just Group and Aviva, continue to actively engage in transactions involving sub-£100 million schemes. This increased competition enhances the options available to pension schemes, fostering improved terms for their members and potentially more favorable premiums.

Iain Church, head of core transactions at Hymans Robertson, encourages smaller schemes to adapt to this competitive environment by strategically approaching buy-ins and buyouts to optimize outcomes. He warns against conventional methods, advising trustees to leverage the wider insurer interest and favorable pricing conditions to avoid potential value loss. Furthermore, Church notes that insurers are offering assistance in areas like guaranteed minimum pension (GMP) equalization and data cleansing, ensuring more predictable buyout timelines.

In a separate development, First Actuarial facilitated a full buyout for the Hille Ergonom Pension Scheme, sponsored by the lighting company Zumtobel. This £4 million transaction with Aviva secured pensions for 56 retirees and 18 deferred members. The transaction not only provided member security but also yielded a financial surplus, enabling the allocation of funds for project expenses and one-off member payments.