As more defined benefit schemes become cashflow negative, the importance of insuring liabilities is growing at a time of favourable pricing.
Schemes have the opportunity to de-risk their schemes through buy-ins and longevity swaps, with an ultimate ambition to reach full buyout.
Yet, designing the right de-risking strategy is scheme dependent, and largely relies on a scheme’s cohort of members.
The question every scheme needs to consider when thinking about this kind of deal is what strategy would deliver best value for money.
The answer to this varies; some argue it is best to insure the younger members with the largest longevity risk, while others say it is those in their mid- to late-70s who often are the cheapest option.
In addition, insuring deferred members may also prove part of a successful de-risking journey, but pricing can be higher than pensioner members.
This live webinar discussion will consider the various opinions on who to de-risk; how schemes can reach this decision; and how to take advantage of good pricing.
In particular, it will ask:
1. Is there a particular group of members that offer significantly better value for money through a buy-in?
2. Would insuring the youngest members enable schemes to reach buyout more quickly?
3. Is there a case for, and good enough pricing, to insure deferred members?
4. What questions do trustees need to be asking when looking for value for money in de-risking deals?
5. What does the current de-risking market look like?
Presenters
Stephanie Baxter is deputy editor of Professional Pensions.
She joined Professional Pensions as chief correspondent in July 2014 before being promoted to news editor in January 2016 and deputy editor in 2017.
Stephanie has written across a range of pension topics including fund management, defined benefit scheme funding, local government pensions, and regulation.
Stephanie has been a financial journalist for eight years.
She joined Professional Pensions from her role as online editor at Global Investor/ISF, a Euromoney-owned title covering the asset servicing, asset management and securities finance sectors. She worked at the online and monthly print publication for almost three years having joined in 2011 as a reporter.
Stephanie was named as Journalist of the Year (Pensions Issues) at the 2017 State Street UK Institutional Press Awards.
Outside of pensions, Stephanie enjoys going to the theatre and music gigs. She also likes running and has recently taken up tennis again having been an avid player in her youth.
Nigel is currently the Head of Consulting & Actuarial at Broadstone and focuses on delivery of the Firm’s strategic goals and growing market share. Nigel is a qualified actuary with over 20 years’ experience in the pensions industry and is a scheme actuary to a number of schemes ranging from under £10 million to over £1 billion in asset size. He also specialises in liability management and pension scheme de-risking.
Nigel joined Mitchell Consulting, now Broadstone, in 2009, having previously held senior roles with, KPMG, Mercer and Aon Consulting.
Nigel sits on a number of committees for the Actuarial Profession and has been the President of the North West Actuarial Society since 2010 and is also a School Governor.
Emma is the Bulk Annuities Director for Scottish Widows, where she is responsible for the overall service delivery of buy-ins and buy-outs to trustee and policyholder clients. Prior to joining Scottish Widows in June 2015, Emma was a partner at a leading consultancy, specialising in helping trustees and companies manage defined benefit pension scheme risk through the use of insurance solutions. Emma acted as lead consultant on a large number of buy-in and buy-out transactions from £1m to £1.6bn and a variety of organisations including Total, Interserve and Makro. Emma has also held senior positions at a number of other insurance companies, having started her pension’s career in defined benefit scheme administration at Prudential. With over 20 years’ experience in the pensions industry, the last 10 of which have been in the bulk annuity market, Emma brings wide practical experience on DB pension schemes.
Madhu Jain is a corporate counsel working in the insurance sector and advises on corporate transactions including pension scheme de-risking transactions. She is part of the team that won the "Most Innovative Firm in Corporate Law" award at the FT Innovative Lawyers Awards for de-risking deals. She has advised pension schemes, major investment banks, insurers, cedents and reinsurers on pension scheme de-risking and other annuity transactions including AXA on various longevity transactions, the MMC Pensions Fund Trustee, Aviva Staff Pension Scheme and the RAC trustee on their longevity transactions; Credit Suisse on the ITV pension scheme longevity swap; Legal & General on a series of buy-in policies and the Trustee of the JLT Pension Scheme; Uniq pension scheme and Unica pension scheme on their bulk annuity policies.
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