Bulk annuities latest: Insurance remains top option for most, finds Aon

A survey of 350 pension schemes carried out by consultancy giant Aon found that three-quarters of schemes plan to move to an insurance solution once this becomes achievable.

Of those schemes that have agreed on an endgame option and are not deliberately keeping their options open, 74% said bulk annuities were the preferred choice.

Bulk annuities were particularly popular among schemes below £500m in size, with 84% indicating they intend to insure ”at the earliest opportunity”, according to Aon.

James Patten, partner in Aon’s UK endgame strategy team, said changes to insurer pricing as well as prospective flexibilities around surplus release could still change how DB schemes approach their endgame planning. In addition, continued geopolitical volatility could shift timelines if asset prices or liability values fluctuate.

He added: “Schemes moving into surplus have inevitably raised new and developing issues. After excluding respondents without a surplus – and who therefore had chosen to have no surplus policy – we found that 28% of schemes had some form of agreement on surplus or a formal surplus policy. A further 31% intend to consider a surplus policy this year.

“Not doing so could lead to deferring returning capital to sponsors in a difficult economic environment, or getting to a situation where older generations of members regard themselves as losing out on the opportunities that accessing surplus might offer. It’s clear that it can be beneficial to put a surplus policy in place before a surplus emerges.”

Standard Life subsidiary insures pension scheme with parent

Standard Life has completed a £200m buy-in transaction with the Abbey Life Assurance Company Limited Staff Pension Scheme, securing the benefits of more than 1,500 members.

The transaction, which was completed last month, covers around 600 deferred members and 900 current pensioners and dependants. The sponsoring employer, Abbey Life, was acquired by Phoenix Group – now Standard Life – in 2016.

Lauren Doherty, pensions risk transfer transaction manager at Standard Life, said: “The buy‑in represents an important de‑risking milestone for the scheme, and our long‑standing relationship and clear alignment on the scheme’s goals allowed all parties to work closely together, supporting an efficient transaction timetable and a smooth route to completion.”

Neil Tointon, chair of the trustee board, said: “This is the culmination of many years of preparation, supported by Aon and Linklaters, and the result of a long-established close relationship with Standard Life. The trustee has greatly appreciated the support from the scheme’s sponsor in making this transaction possible, as well as the commitment and dedication of our advisers to achieve such a great outcome on behalf of our members.”

Aon advised the trustee board on the transaction, while Linklaters provided legal advice. 

Sub-£5m buy-in for software company

Just Group has secured the DB scheme of software company The Access Group for £4.5m. The transaction secures the benefits of 16 deferred and 24 pensioner members, according to Broadstone, which advised on the deal.

The transaction was “concluded swiftly in a busy market”, Broadstone said, while also negotiating the sale of an illiquid asset.

Bob Jenkinson, deal lead at Broadstone, said: “Small scheme transactions like this require specialist knowledge of the insurance market… It was imperative [that] the scheme undertook a robust preparation phase to ensure data was in a suitable state of readiness for the transaction. All of that hard work paid off, and the transaction was completed seamlessly in under 4 weeks during a period of market volatility.”

Palwinder Hare of HS Trustees added: “The seamless execution proved the worth of the rigorous preparation and the strength of the approach. The efficiency of the transaction really put the valuable preparation into perspective and has proved its value.”