Ensure pension risk transfer decisions drive your scheme forward
Pension risk transfer - the new normal
In addition, more DB schemes than ever before are looking at providing their members with greater flexibility in how they access their benefits through member option exercises. With expert guidance, trustees and sponsors can take advantage of the plethora of risk transfer solutions and seize the opportunities that will accelerate their journey to their endgame.
We can help you move forward.
the largest bulk annuity transaction in 2021
of bulk annuity transactions over 70 deals
of all bulk annuity transactions
The Mercer Streamlined Quotation Service
Our Streamlined Quotation Service — helping smaller schemes access bulk annuity pricing
What are your pension risk transfer options?
There is no ‘one size fits all’ approach to pension risk transfer. Each DB scheme has its own set of circumstances and strategic objectives.
Our first step will be to work with you and all relevant stakeholders to understand your DB scheme's strategic objectives. We will then work in partnership to identify the pension risk transfer solutions that are right for you and your members.
There are several solutions available for schemes in the process of assessing their DB pension risk transfer options. Mercer believes all DB pension schemes should be considering which risk transfer activities fit within their long-term strategy, along with how and when to deploy them.
A pension buy in involves the trustees purchasing a bulk annuity policy to cover some or all of their scheme's DB liabilities. Total market volumes of bulk annuity transactions have seen a step change in recent years to around £30 billion per annum. A wide range of factors, such as maturing schemes, sponsor contributions and financial market movements mean that many schemes are closer than they think to affording a buy in. Mercer has a strong track record for completing deals for its clients and advised on around a quarter of all transactions in the bulk annuity market over 2020 and 2021.
Smaller schemes can struggle to get quotations in a busy bulk annuity marketplace. Our Mercer Streamlined Quotation Service can help – it has helped Mercer advise over 20 sub-£50 million buy ins and lead on almost 30% of all sub-£100 million buy ins in 2021.
A Government white paper opened the door to DB pension scheme consolidation, with two commercial consolidators emerging to date; Clara Pensions – assessed by the Pensions Regulator – and The Pensions Superfund, which is in assessment.
In a challenging economic environment, we would expect the more distressed employers to find this an attractive option. However, commercial consolidators, and indeed buy in and buyout providers, are just one end of the spectrum of consolidation options. Mercer has a team of consolidation experts covering risk transfer, covenant, DB master trust and investments who will help you work out what the right solution is for your scheme.
- 2021 saw record volumes of bulk annuity deals below £1bn in size, 10% higher than any previous year.
- Overall bulk annuity deal volumes were down on 2019 and 2020 due to fewer 'jumbo' deals of £1bn completing, but significant numbers of smaller bulk annuities were written (almost 65% of all 2021 deals were £100m or under).
- The second half of 2021 saw a surge in bulk annuity transactions, with almost £20bn written in six months, including the Mercer-led £2.2bn metal box buy out, after a relatively quiet start to thee year dominated by small to mid-sized deals.
- Around £15bn of longevity swaps transacted (across 4 deals) over 2021; the third highest year on record.
Before you access this page, please read and accept the terms and legal notices below. You’re about to enter a page intended for sophisticated, institutional investors only.
This content is provided for informational purposes only. The information provided does not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities, or an offer, invitation or solicitation of any specific products or the investment management services of Mercer, or an offer or invitation to enter into any portfolio management mandate with Mercer.
Past performance is not an indication of future performance. If you are not able to accept these terms and conditions, please decline and do not proceed further. We reserve the right to suspend or withdraw access to any page(s) included on this website without notice at any time and Mercer accepts no liability if, for any reason, these pages are unavailable at any time or for any period.