Undertaking a bulk annuity or pension de-risking transaction, whether it is a buy-in, buy-out or any other form of de-risking (such as a longevity swap), is a significant event for all concerned – its members, the trustees and the employer.
The pension scheme, after sometimes decades of relatively stable existence, may be facing a wind-up or another form of major alteration.
The scheme members may be concerned about the security of their benefits as the scheme undergoes radical change.
For the scheme trustees and the sponsoring employer, there is the added responsibility of overseeing the whole process while safeguarding members’ benefits. They must ensure that the chosen insurer is a safe and secure destination for what, for many members, is their largest financial asset.
Many trustees and employers have little or no experience of carrying out a similar transaction and may be daunted by the whole process, despite the professional support being offered by their various advisers. There is a lot to consider. This could be a one-off event that will irreversibly transfer the obligation of paying the members’ pensions from the scheme to an insurer with whom they have only recently become acquainted.