Insurers launch bulk annuity guide

DLA Piper, in collaboration with UK insurers operating in the bulk annuity market, has produced an insurer-led best practice guide on Preparing Pension Schemes for a Bulk Annuity Quotation.

The guide aims to drive greater efficiency within the industry by providing more transaction certainty for trustees whilst also helping insurers to increase their quote capacity.

It was produced in collaboration with Aviva, Canada Life, Just Retirement, Pension Insurance Corporation (PIC), Rothesay, and Scottish Widows, and was highlighted by DLA Piper as "a first step in making the whole quotes process more efficient for the entire industry".

Several recommendations were made in the guide, such as supplying as much information as possible upfront to give insurers plenty of notification around the expected timescales and trustee plans for the project.

The guide also recommended providing full asset data early in the process, being realistic with your timescales, and considering options for risk allocation after buyout and the approach to due diligence at an early stage.

DLA Piper stated that the creation of the guide was due to “increasing number of DB pension schemes approaching the market” as, over the past decade, more than £200bn of retirement income has been secured through buy-in and buyout transactions with insurers in the UK.

Additionally, the group pointed out that the market agreed transactions totalling almost £30bn in 2021, and many industry commentators forecast that the volume in 2022 will comfortably surpass this, making it one of the largest ever years in the history of the market.

Demand for buy-ins and buyouts is also expected to grow significantly as funding levels improve and DB pension schemes move closer to their endgame objectives.

The guide is aimed at all stakeholders involved in bringing transactions to insurers, with DLA Piper confirming that the principles in the guide “apply to any size of transaction, regardless of what stage the scheme is at in its de-risking journey”.

DLA Piper head of pensions de-risking, Amrit Mclean, commented: “This remarkable industry continues to thrive and will only get busier. We know all insurers are keen to quote on and to write as many deals as possible.

“This guide is a first step in making the whole quotes process more efficient for the entire industry. We look forward to working with the insurers on further updates to the guide over the coming months and years, as the industry continues to evolve and innovate.”

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