Mercer has launched an online marketplace which it claims will revolutionise the bulk annuity market for defined benefit (DB) pension schemes in the UK.
The Mercer Pension Risk Exchange provides sponsoring employers and trustees seeking to complete a buyout or buy-in with a range of pricing and terms produced directly by insurers on a monthly basis, based on a scheme’s actual benefit structure and individual member data.
The platform, which is thought to be the first of its kind in the UK, was launched in the US in June and is expected to be rolled out in Canada soon.
“The Exchange gives decision-makers the information they need to act with confidence. It sources actual real-life insurer pricing, not indicative pricing estimated by an adviser” said David Ellis, UK leader, Bulk Pensions Insurance Advisory at Mercer.
“If you have ever wished you could obtain pricing produced directly by insurers, specific to your pension scheme, on a regular basis – then now you can. Even if in many cases you do not intend to transact for a few years. It’s a leap forward in the management of DB pension risk.”
Mercer has led on more than 175 bulk annuity transactions with aggregate premiums of over £16bn – representing around a quarter of all such transactions in the UK by premium volume. Mercer has also been lead adviser on 7 of the 10 largest buyouts carried out in the UK, including lead on all four buyout transactions above £1bn.
Alan Baker, Partner and Head of Mercer’s UK DB Risk team said: “Many companies have the appetite to transfer pension risk off their balance sheet but they face barriers: lack of clear information about the true cost of a buy-in or buyout, limited transparency, the fluctuation of market rates and scheme economics to name but a few. Mercer Pension Risk Exchange empowers sponsoring employers and trustees to be more strategic and sophisticated in their approach and to know that they are executing a buy-in or a buyout at the best time for them and at a competitive price. This is the only solution that provides genuine scheme specific pricing by insurers.”
Legal & General director of UK pension risk transfer for core business, Phill Beach added: “The pension de-risking market is entering an exciting period with a lot of innovation. I believe this new technology platform will lead the way in helping clients understand market pricing and most importantly the point at which transacting works best for the scheme. Timing can often be the most important factor in realising best value.”
Comments