Just Group publishes bulk annuity preparation guide for trustees

Just Group has published guidance for trustees preparing for bulk annuity transactions, with the aim of helping them ‘box clever’ amid rising demand.

The firm noted that leading consultancies were predicting strong demand to continue in the bulk annuity market.

With 63 per cent of the deals written in 2021 being of values less than £100m, Just warned that many schemes will have to work hard to gain insurer attention and resource in such a busy market.

The guide draws on the knowledge of professionals involved in each stage of the process, with contributions from Aon, K3 Advisory, 20-20 Trustees, Hymans Robertson, DLA Piper, Pinsent Masons and LCP.

It aims to provide a step-by-step guide towards de-risking, detailing why each element is important and how schemes should approach each step.

“For any scheme, small or large, there are three key points to keep in mind when it comes to preparing for a bulk annuity: start early, ensure the data is cleansed and be clear on the scheme benefit specifications,” said Just Group director of business development, Rob Mechem.

“No matter how busy the market, having these things well progressed, will give schemes a head start. Our brand-new guide explains why these three elements are so vitally important and also provides a nine-step checklist for schemes as they progress towards de-risking.”

Also commenting on the launch of the guide, K3 Advisory managing director, Adam Davis, said: “If advisers and trustees follow the key steps outlined in this guide to prepare for a bulk annuity, have engaged insurers and are aware of their workloads and capacity, then it’s possible to get multiple insurers to quote, which creates desirable competitive tension.”

The guide, Preparing for a Bulk Annuity, also covers areas such as GMP equalisation, which Pinsent Masons partner, Robert Tellwright, stated could create opportunities for well-prepared schemes to stand out from the crowd in a busy de-risking market.

“Whilst insurers are now generally able to accommodate dual records approaches, some insurers may be attracted to the idea of insuring benefits which have already been simplified through a GMP conversion process,” he commented.

“Either way, insurers are very likely to insist that GMP equalisation is completed anyway, before individual annuity policies can be issued to members under a buyout process.”

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