One of the biggest concerns for scheme trustees and sponsors is how and when to transfer risk to an insurance company via a buy-in, buy-out or longevity swap. We can guide you to the right solution.
At Hymans Robertson we can help you understand the risks to your scheme’s funding position and help you prioritise what action to take.
If risk transfer is the right choice for you, then you can be confident that our deep market knowledge will help you obtain the best value from any transaction. Our time, energy and resource have been invested to make the process of transferring risk simple.
In just four simple steps, our tool can estimate whether your scheme could benefit from a buy-in. Find out if you may be in a position to start chipping away at your scheme’s risks.
Transferring risk can sometimes be seen as too hard or too far away. By focusing on your strategy we can help you deliver great outcomes, even if this means pioneering new ways to manage risk. In 2013 we performed the first medically unwritten buy-in and have advised on 25% of all these transactions since then.
Reducing risk through buy-in
Like many schemes, the £200m Institute of Chartered Accountants Staff Pensions Fund was exposed to a significant concentration of risk, with a small number of pensioners representing a large proportion of liability. The Trustee’s objective was to cost effectively remove this risk, improve member security and reduce financial volatility.
We advised the Trustee to consider a medically underwritten buy-in covering 20 pensioners with the highest individual liabilities. We worked closely with the Trustee and a specialist provider and the £24m transaction was completed in January 2014.
The Trustee removed all the risks associated with these high-liability members at a price which didn't impact on the funding position. This contributed significantly towards reducing the concentration of risk and met the Trustee’s objective. Structured appropriately, the buy-in also leaves the way open to any future risk management actions, including future buy-ins.
A great outcome
The Trustee is delighted to have taken another important step to materially reduce risk for its members. Hymans Robertson used their significant experience of the medically underwritten buy-in market to expertly guide us through this second buy-in; enabling us to insure a large proportion of our pensioner liabilities at a particularly attractive price – a great outcome for everyone associated with the Fund.
Chair of FCA Ltd, trustee of The Institute of Chartered Accountants Staff Pensions Fund
Innovation and expertise supporting broad de-risking - completely offloading liability for scheme assets and liabilities to a regulated insurer.
As you consider and pursue your buy-OUT, our tailored approach will include advice on:
In 2014, we helped a client settle £2.5bn of liabilities through a partial buy-out with a leading insurer as part of a broad de-risking strategy. This ground-breaking work paved the way for other schemes to follow.
We all welcome our experiences of improving health, quality of medical care and increasing longevity. However, for those running pensions, increasing longevity is a real challenge and key contributor to scheme liabilities.
Our unrivalled longevity expertise through Club Vita and close relationships with leading insurance and reinsurance companies, means no one is better placed than us to secure you a deal on the best terms.
Tackling risk and addressing deficits through longevity risk transfer
We are Scheme Actuary to the staff pension scheme of a large outsourcing company with c£1bn of assets. The scheme is relatively immature with only c30% of liabilities linked to pensioner members.
The client was concerned about potential volatility – both investment and longevity. The risks ran in to several hundreds of millions of pounds.
We market tested longevity hedging solutions, using our market knowledge to focus on the most attractively priced solutions for different sections of their longevity risk. As the scheme had a high concentration of risk in a small number of members, we recommended a medically underwritten buy-in for these members, with a bespoke longevity swap for the rest of the pension population and an index swap for non-pensioners.
We worked openly and collaboratively with the company and their advisors in all strategic risk management matters; and this project was no exception. We hosted joint company/trustee working party meetings and shared our advice with all parties. This made decision making easy and straightforward.
Throughout the process, the trustees used Club Vita to ensure they fully understood the longevity characteristics of this sub section of members and to benchmark quotes from different providers.
Unique insights for Legal & General
Hymans Robertson’s granular and extensive longevity data, together with its thorough quality assurance processes, allows great depth and breadth of analysis when assessing longevity risk. Our partnership will enable us to have a unique insight into expected pension scheme mortality experience.
Former Head of Bulk Annuities and Longevity Assurance, Legal & General
The information contained does not constitute advice and should not be considered a substitute for specific advice.
Club Vita LLP is an Appointed Representative of Hymans Robertson which is authorised and regulated by the Financial Conduct Authority and licensed by the Institute and Faculty of Actuaries for a range of investment business activities.