Bulk annuity service launched in bid to revolutionise transactions

The employee benefit provider launched the buyout comparison service and monitoring tool on 22 March, seeking to allow schemes and their trustees to receive regular bulk annuity quotations from insurers, and to provide greater overall visibility of the marketplace.

The firm explained, through this innovation, "any scheme can self-load their own data and receive prices", creating more opportunities for schemes to choose between different insurers to transact with. Improved automation means better information, more quotations and less chance of missing good deals, said the provider.

The service launched with eight pension schemes already fully enrolled, with initial quotations expected "imminently".

JLT Employee Benefits director and head of buyouts Harry Harper said the key limiting factor in the bulk annuity market to date has been the high time-cost of insurer and consultant manpower. With more schemes expected to flock to the market this year, the existing model has become "inefficient" by giving rise to "a situation where schemes received less quotes, paid higher prices and could not update quotations regularly, to the detriment of all market participants" - which the tool aims to address, he said.

Harper continued: "By allowing schemes to access regular ‘real' pricing, companies and trustees using our service will be able to spot when insurer pricing has improved and can transact immediately to capture the pricing opportunity."

How it works

Trustees would be able to upload anonymised member data to a secure online portal, which would then be shared with the eight insurers currently active in the marketplace in one streamlined data file.

Trustees using the comparison service would then receive regular price quotations from insurers as opposed to proxy buyout prices.  Theoretically, this would allow them to accelerate the process of locking into a contract.

According to the provider, the removal of each scheme's "highly bespoke benefit specification" would automate the process for insurers by ensuring the data obtained from schemes is digitally standardised and streamlined, thereby speeding up both data compilation and the pricing process and enabling them to value multiple schemes without any reprogramming of pricing systems.

Traditionally, trustees have submitted scheme data and benefits in bespoke formats, with insurers pricing from scratch in a manually intensive process. This meant that trustees received quotes from fewer insurers, and did not receive regular pricing, "therefore missing out on opportunities" according to Harper.

However, Harper explained that as de-risking demand continues to grow, driven in part by recent improvements in scheme funding levels, appetite to insure and settle costly legacy pension liabilities via bulk annuity transactions is on the rise.

Last year, UK buy-ins and buyouts totalled £12.4bn across seven insurance companies.  But with £12bn of Prudential's annuity portfolio recently transferring to Rothesay Life, combined with the recent news that Phoenix is taking on Standard Life's annuity portfolio, the total value of annuity liabilities taken on by the eight insurers currently active in the market is expected to hit £40bn in 2018.

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• Topics
• Risk Reduction
• Admin / Technology
• Annuities
• actuarial science
• financial markets
• Retirement
• pricing
• Social Issues
• Prudential
• Harry Harper
• director and head of buyouts
• consultant
• Rothesay Life
• Standard Life
• JLT Employee Benefits