Insurers should consider eyeing up smaller de-risking transactions rather than focusing on the mega deals that can end up falling away, according to Aon Hewitt.
During a discussion on the issue of longevity risk for schemes, the consultancy's head of risk settlement Martin Bird (pictured) noted there is increasing appetite from schemes to do a series of buy-ins rather than a full buyout of liabilities.
His comments came on the back of concern that smaller schemes in particular have been crowded out of the de-risking market in recent years because some insurers tended to go after the big buy-in or full buyout deals.
"Trustees may find it a lot easier to do transactions that aren't 100% de-risk solution because they feel that they're taking a step in the right direction rather than making this massive one-time decision," Bird said. "There's almost nervousness from trustees that if they do a large transaction, they will regret it."
This trend towards small and incremental steps on the path to de-risking rather than doing a full buyout or a big buy-in, should lead to de-risking strategies being structured over a much longer period, he added.
"The general trajectory is more and more structuring around de-risking, and a growth in trustees taking mini-steps as part of their bigger pension plans.
This growth is not just around settlement but also around liability management and funding arrangements and other forms of securities all adding to the package of de-risking and how trustees run their pension schemes. It's about carefully managing a legacy risk with DB schemes."
He said this could turn into a big business opportunity for insurers and warned against focusing on the mega deals such as full buyouts that tend to attract a lot of attention.
"Mega-deals may fall away and all of a sudden the insurers have budgeted for a big market capacity. In this occasion, there really are some great opportunities to step in and make use of that capacity."
Bird added that trustees needed to be nimbler and seize the opportunities presented by some insurers looking to engage with smaller schemes.
"If a small scheme is organised and ready to move then great prices can be found. Quite often with these smaller schemes it's about getting ready and being in good shape."
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment says today.
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.
More members transferred out of defined benefit (DB) pension schemes in October after September's record lows while values were surprisingly stable, according to XPS Pensions Group's Transfer Watch.
Joanna Smith says trustees will need to accurately identify if covenant issues are short-term affordability concerns, or the start of more material deterioration.