Partnership has completed a £22m enhanced buy-in for a client of Hymans Robertson covering around 20 of the pension scheme’s highest liability pensioner members.
In common with many of the UK pension schemes, the trustees and sponsoring employer recognised that their scheme was exposed to a significant concentration of risk, with a small number of pensioners representing a very large proportion of their liability. Their objective was to tackle this risk in a cost effective way, to improve member security and reduce financial volatility.
Partnership’s medically underwritten buy-in proved to be the perfect solution as the health information gathered from their one-page medical questionnaire enabled them to offer a highly competitive buy-in quotation. Hymans Robertson, lead adviser, and Squire Sanders, legal adviser, provided specialist advice to the trustees throughout the process.
James Mullins, Partner and Head of Buy-out Solutions at Hymans Robertson said: “This is by far the largest medically underwritten buy-in to date and given the competitive pricing and current client demand, I strongly expect the market for these transactions to grow rapidly over the next year and beyond. For trustees and sponsoring employers understandably concerned about their concentration of risk, an enhanced buy-in is a tailored and cost effective way of managing their scheme’s liabilities. In this case, Partnership’s competitive price allowed the pension scheme to remove this risk at a cost below their technical provisions reserves.”
David Harvey, Head of De-risking Solutions at Partnership said: “The nature and size of this transaction demonstrates how medically underwritten buy-ins can play a significant part in the de-risking of any size of scheme, including those larger schemes looking to remove the risk of those with the highest liabilities”.
Carol Dick, Partner at Squire Sanders said: “The trustees are long standing clients of the Firm and we are delighted to have been able to help them address the pension scheme’s highest concentration of risk through a medically underwritten buy-in. In doing so we were able to use our extensive experience of advising on buy-ins to negotiate the documentation to achieve the best solution for our clients. This transaction is an example of the sort of creative solutions we are working on with our clients in the current market in order to manage the financial risks to which ageing pension schemes are becoming increasingly exposed.”
Partnership has now written over £37m of medically underwritten bulk annuity business for defined benefit pension schemes since December 2012.
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