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The bulk annuity market is generally dominated by large schemes. We have proved that it is possible for small schemes to get quotations and that they are competitively priced.
Carter and Parker Ltd staff retirement benefits plan completed a £9.3m pensioner buy-in, which attracted multiple insurers and received very competitive pricing.
Like many sponsors with small schemes, they were aware that it was inefficient and costly to run on a small pension scheme and decided that they eventually wanted a buyout.
The scheme ran an investment strategy that was balanced and had an allocation to growth assets to try to accelerate the time it would take to reach full buyout.
Both the trustees and the company were aware of the investment risks connected with their strategy and wanted to reduce these risks.
“At Canada Life, we pride ourselves on being able to offer attractive solutions to both smaller and larger defined benefit schemes.”
A simple broking process
The interaction with insurers started with K3 advisory EBC sending a factsheet to all insurers in the market, setting out the scheme’s prospects. This helped to identify insurers’ resourcing capacity and work out the ideal time to take the scheme to market. By using this approach, the scheme approached the market at a time when three insurers were willing to bid.
The process of going to market was made simple with a single round, best and final quotation. Insurers were given a price target by K3 advisory that demonstrated the pricing level where the scheme would transact.
Three insurers made bids and the scheme achieved pricing at better-than-expected levels.
Adam Davis at K3 Advisory confidently asserts that this is no one-off, commenting, “Carter and Parker is a great example, across the board, of how to do things right. The client was engaged and proactive and the advisory firms involved worked well together, using their own expertise to enhance the process”.