The market for small pension scheme buy-ins remains robust even as larger deals are being announced, according to consultancy firm Quantum Advisory.
The company recently advised on a £9.7m buy-in with Aviva for a defined benefit (DB) scheme sponsored by a transport company.
After a period dominated by sub-£100m transactions, recent announcements have included a £300m buy-in for the Elementis Group Pension Scheme with Aviva and a £208m buy-in for the Hickson UK Group Pension Scheme with Royal London.
Chris Mason, principal consultant at Quantum Advisory, said the pension insurance market was still “highly competitive”, presenting small DB schemes with opportunities if they are “well prepared and have a clear strategy”.
“There can sometimes be a perception that insurers are focused solely on the largest transactions, but our experience is that smaller schemes can achieve excellent outcomes when they enter the market in the right way,” Mason said.
He added: “Smaller schemes are increasingly moving towards endgame risk transfer transactions. Every scheme is different, but what remains consistent is the importance of planning. Risk transfer is not simply about completing a transaction; it’s about ensuring trustees are in the strongest possible position to make informed decisions at the right time.”
Separately, Aon has launched a new streamlined service for DB schemes exploring their endgame options. ‘Future DB’ is designed to support schemes whether they are targeting a buyout, running on, or exploring other options.
Ben Roe, senior partner and head of UK retirement at Aon, said the new service combined administration, governance, actuarial, investment and covenant advice “within a single, streamlined framework”, helping schemes to be “endgame-ready from the outset”.
Maria Johannessen, senior partner and UK head of investment at Aon, added: “As pension schemes close in on their desired destination, the ability to automatically align investment strategy with endgame scenarios is a powerful tool for getting the best possible outcomes for schemes and their members.”
Aviva and Royal London buy-in details
Aviva’s £300m buy-in with the Elementis Group Pension Scheme secured the benefits of 4,500 members, according to a press release from the insurer.
The transaction included additional voluntary contributions, which members can use as their tax-free cash at retirement through Aviva’s defined contribution master trust. A price lock on the deal allowed the trustees time to sell down less liquid holdings ready for the transfer of assets.
Sean Rooney, senior bulk annuity deal manager at Aviva, said the insurer was also offering post-transaction data cleansing services to aid the path to a full buyout.
Royal London’s £208m buy-in with the Hickson UK Group Pension Scheme insured more than 1,250 members and is the third largest external deal the insurer has completed.
The deal was aided by the scheme’s long-standing relationship with Royal London Asset Management, according to Mark Sharkey, bulk annuity origination lead at Royal London. This “established a strong starting point for us to really understand their priorities and develop a tailored solution”, he explained.
Nikhil Patel, head of bulk annuities at Barnett Waddingham, said: “In such a competitive space in the market, the transaction led to some strong proposals for the trustees to consider. Ultimately, the trustees were able to secure a deal that met the needs of the scheme, sponsor and members, including insuring the non-standard features of the benefits.”
