Pension scheme bulk annuity transactions can be impacted by challenges brought from company accounting without careful planning, Hymans Robertson has warned.

Hymans Robertson noted that, as buy-ins are an “increasingly common outcome” for defined benefit (DB) pension schemes, and that growth looks set to continue in 2023, the importance of minimising repercussions through early planning and company engagement was “vital”.

Hymans Robertson partner and risk transfer specialist, Lara Desay, explained the importance of early engagement, stating that it was imperative to help avoid accounting issues de-railing risk transfer strategies and plans.

Desay also stated that the earlier a scheme can work with the sponsor to consider the implications, the more this can help minimise any bumps and hurdles as the transaction moves towards completion.

Hymans Robertson’s warning comes after polling at a recent company webinar found that nearly two-thirds (61.3 per cent) of trustees believed that the accounting can negatively impact buy-in transactions with the potential for unexpected financial impacts.

“The results from our webinar poll found that nearly two-thirds of trustees have examples where company accounting has impacted buy-in transaction, demonstrating that there is a clear need to minimise”, Desay commented.

“If corporates are able to clearly set out the objectives of a transaction, and document a strong rationale for the proposed accounting approach, this will facilitate any discussions with auditors.

“The more a company can forward plan, consider the accounting impacts and seek auditor agreement early to the proposed approach, the better positioned they will be able to minimise the chances of anything going wrong for the scheme’s buy-in project.”

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