David Poulton, head of client services, at Legal & General Retirement, explains the company's collaborative approach both before and after the purchase of an insurance policy
I have spent nearly 20 years in the buy-in and buyout market and have had the privilege of working with many trustees in my career. I am always glad to see that they put their members' interests at the heart of what they do. At Legal & General we are similarly concerned with making sure our policyholders are treated fairly and well. We have found that the best way to achieve these common goals is to take a collaborative approach across the stakeholders involved in what will typically be the most significant transaction in a pension scheme's lifetime.
To enable trustees to make an informed decision when facing the choice of purchasing a buy-in or buyout, we believe in providing an understanding of the activities involved not only in the run-up to purchasing the insurance policy but also in the months following the transfer of premium. The trustee and member experience will benefit from following certain lessons we have learned while helping to put in place the insurance arrangements for thousands of schemes.
1. Build a team that thinks beyond the date of signing the transaction documents
Each scheme benefits from dedicated members of my team working with them well before the transaction is signed, and these individuals continue to work for the scheme until individual member policies have been issued. They will collaborate not only with the new business team within Legal & General but with the advisers and administrators working for the trustees. Early engagement of the individuals responsible for the ongoing operation of the insurance policies means there is strong institutional knowledge of the scheme within Legal & General and the trustees have a single point of contact throughout the process when it comes to how their members will be looked after.
2. Build up a full picture of the benefit promises
The core requirement for us as insurer is to pay the right benefits to the right individuals on time, every time. For us to know what the right benefits are, it is important for us to understand the scheme benefits not just as set out in the rules (or summaries of the rules provided to us) but also in how they are administered in practice. Achieving a smooth process for all involved, in particular for schemes with a history of mergers and transfers, rests on developing this understanding early, often before a scheme approaches the market for a formal pricing exercise. My team has supported a number of schemes at early stages of their decision-making process to allow them to carry out investigations on these matters that have led to a better trustee experience when they decided to approach the market for a transaction and a better experience for all when their members became our policyholders.
3. Understand and plan for the full process
Among my team are a number of dedicated project managers who will ensure that all stakeholders involved in the process up until transfer of payroll and issuing individual policies understand their roles and responsibilities. They will track the milestones and the crucial inputs and decisions required from trustees, scheme administrators, advisers and Legal & General. While it may appear daunting to have a project plan spanning multiple months in front of you, we find that having a holistic understanding of everything that is required and breaking it down into its component parts means all steps in the process can be completed with efficiency and to the complete satisfaction of the trustees and scheme members.
At Legal & General we know that member administration and payroll is critical and that is why we carry out all scheme implementation and administration in-house within the UK. This means we have complete end-to-end control and can offer all scheme members the same high quality of service.
Choosing a provider that not only has the right experience and knowledge but also shares the same values as the trustees is paramount in my view. After all, we will be the ones looking after your scheme members for years to come.
If you would like further information on how we look after members or how we can provide early support to a pension scheme considering the purchase of a buy-in or buyout, please contact me at [email protected].