Insurer innovation leading to faster DB Risk Transfer wind-up

Increased innovation from insurers is expected to lead to the faster wind up of DB pensions schemes following risk transfer transactions, claims Hymans Robertson in its latest paper. It argues that innovations such as insurer led data and GMP work, investment in digital capabilities and improved processes are decreasing the time of the post transaction phase of DB scheme buy-out journeys, with the potential to solve the issue of delays to winding up schemes. It says that around 75%* of wind-up projects suffered delays, leading to uncertainty and increased costs for the sponsor. Now, by taking advantage of the increasing insurer-led innovations, more schemes may be able to reach buy-out faster, giving more certainty on cost and timelines. The leading pensions and financial services consultancy is calling on trustees to review their wind-up strategy to ensure they are taking advantage of these ongoing innovations for the benefit of their scheme members. 

Commenting on insurer innovation in the bulk annuity risk transfer market, Joanne Gyte, Partner, Hymans Robertson, said:

“Over the two years, we’ve seen post-transaction delays become one of the most significant challenges for schemes targeting buy-out. While securing a transaction remains a key milestone, the real test increasingly lies in getting schemes through the final stages efficiently and with confidence. Despite recently seeing the most buy-outs ever completed, many schemes are still in the post-transaction phase. Around three in four of these projects have delays. 

“Trustees and sponsors are beginning to recognise that a good transaction is no longer just about securing a deal at the right price, but also getting through the subsequent phases quickly, predictably and without costly delays. Without a clear and aligned approach to delivery, DB schemes risk delays that can increase costs, create uncertainty and impact member experience. It’s encouraging to see the market responding to this.

“Insurers are starting to take a more active role in addressing the practical challenges that have historically slowed progress. This includes piloting insurer-led approaches to GMP equalisation, introducing ‘fast-track’ journeys from buy-in to buy-out, and investing in digital capabilities such as data interrogation tools and member-facing platforms. While it’s still early days for some of these innovations, they have the potential to make a meaningful difference. If the market can continue to evolve in this way, we’re optimistic that DB schemes will be able to reach buy-out faster, with greater certainty on costs and outcomes.

“For trustees and sponsors, this highlights the importance of thinking beyond the transaction itself. Having a clear plan in place, with aligned objectives and a well-defined approach to handling key risks and operational challenges, will allow a scheme to take full advantage of the emerging innovations and be critical to avoiding delays and ensuring a smoother path to buy-out. 

“While improving speed is important, it should be balanced with maintaining robust processes and strong governance throughout the post-transaction phase. A well-managed journey is one that works towards what we call FAST: frictionless, aligned, streamlined and timely. This will ultimately deliver better outcomes for trustees, sponsors and members alike, particularly where clear timelines and expectations can be maintained.”

*From Hymans Robertson survey of professional trustees

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