Financial consultant Mercer has launched its Pension Buyout Index to assist companies and trustees when it comes to de-risking, based primarily on pricing data from three key UK life insurers.

The three insurers that Mercer bases its Index pricing on are Aviva, Legal & General and Pension Insurance Corporation (PIC).

Plan sponsors have access through the index to a monthly snapshot of the affordability of purchasing a bulk annuity.

"Purchasing a bulk annuity from a life insurer is a key way to manage or remove a pension plan's obligations and the associated risks," said David Ellis, head of longevity risk management at Mercer. "It is a significant transaction however, and knowing when to trade can be difficult as most existing reviews of the UK bulk annuity market are either not available frequently enough or are based on the bulk annuity prices offered by only one insurer. Mercer's index gives sponsors much more clarity when considering this tactic."

The buyout/buy-in market is a big one in the UK, with around 125 deals struck in 2009, from the RSA Insurance plc and Rothesay Life Limited transaction of £1.9bn, to the smallest with a premium of less than £100,000.

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