A roundup of the latest bulk annuity market news, including a full scheme buy-in for Aston Martin Lagonda and Isio’s micro scheme service reaching 20 transactions.
Aviva has completed a £180m buy-in with the Aston Martin Lagonda Pension Scheme, sponsored by luxury car manufacturer Aston Martin. The deal secures the benefits of around 540 pensioners and 1,050 deferred members.
Sam Jenkins, partner at LCP, which advised on the transaction, said the pension scheme had been able to move quickly to secure “a hugely attractive opportunity”.
“The scheme benefited from a tailored market approach to help achieve its ambitions, and it was a real team effort across the trustees, sponsor and all advisers, allowing us to move swiftly and effectively when the opportunity was identified,” Jenkins added.
Kerry Foster, bulk annuity deal manager at Aviva, said the deal “highlights the value of how a scheme’s approach to market is structured”.
Separately, M&G completed another ‘BPA Plus’ transaction with a pension scheme sponsored by an unnamed insurance company. The deal is worth £150m and involves a ‘risk sharing’ element alongside M&G’s £132bn With-Profits Fund, which provides the opportunity for bonuses to be paid to members if investment returns allow.
WTW was the lead adviser, while Clyde & Co provided legal advice.
Isio marks milestone for micro scheme service
Consultancy group Isio has onboarded 20 sub-£15m pension schemes onto its PenUltimate Micro insurance service for schemes with fewer than 100 members, and expects to double this in the next 12 months.
Two of these schemes have completed buy-ins within 12 months, including the Pension and Life Assurance Plan of the Godolphin Company Limited and The Graham Asset Management Pension and Life Assurance Scheme.
Isio said six of the 10 insurers active in the bulk annuity market were interested in schemes coming through the PenUltimate Micro service, and it expects to have transacted with four different insurers before the end of the year.
“More insurers are engaging with smaller schemes and developing dedicated solutions, creating greater choice for trustees and making insurance a realistic option for more schemes than ever before.”
The company has also introduced PenUltimate Micro+, which supports schemes that “require more time” before approaching the insurance market. This bundles together Isio’s administration, actuarial, investment and governance services to support schemes to get ready for the insurance market.
Christian Costi, Insurance Director at Isio, said: “These schemes often face the same regulatory and governance challenges as much larger arrangements but have fewer resources available to manage them.
“We’re also seeing the market evolve. More insurers are engaging with smaller schemes and developing dedicated solutions, creating greater choice for trustees and making insurance a realistic option for more schemes than ever before.”
Look beyond ‘transaction day’ for bulk annuity success, says Cartwright
Trustees should not view buy-ins as a “finish line” for their schemes as there are often myriad complex issues to address once a deal is complete, according to Cartwright.
The consultancy said the high volume of buy-ins completed in recent years meant attention was turning towards what happens afterwards, and how schemes can successfully transition from a buy-in to a buyout and wind-up.
Rob Chandler, consultant at Cartwright Pension Trusts, said: “Completing a buy-in is a major achievement and one that trustees and sponsors should rightly recognise. However, transaction day should be viewed as a milestone rather than a finish line. The work required afterwards is critical to delivering the scheme’s long-term objective.
“The important question for trustees is not whether issues will emerge, but whether they have the right processes and expertise in place to address them effectively.”
Rob Chandler, Cartwright
Data quality was a particular issue for this phase of a scheme’s journey, Chandler explained, as in-depth reviews can uncover errors, missing information, and inconsistencies that need to be addressed before a buyout can be completed.
“The important question for trustees is not whether issues will emerge, but whether they have the right processes and expertise in place to address them effectively,” he said.
“Ultimately, completing a transaction is only one part of the endgame process. Whether a scheme is moving towards buyout or pursuing another long-term strategy, success depends on the preparation, governance and collaboration that follows.”
