Risk Transfer
At Quantum Advisory, we have a dedicated team specialising in risk transfer projects, from liability management exercises to master trusts, buy-ins, buy-outs and the potential use of consolidators. Our experience has been built up over many years and there are few issues we have not collectively encountered and overcome.
With extensive industry experience, our Risk Transfer Team has been selected from across the business and includes senior actuarial and investment consultants, data specialists, project managers and DC experts.
We are in regular contact with and maintain relationships with all the key insurance companies and pension consolidators. We therefore have a deep understanding of the appetite and capacity of the providers, allowing our clients to focus their time and resource on the providers most likely to deliver transactable solutions in the timeframes required.
What we can do
We have a packaged service ready to manage the risk transfer journey.
For any pension scheme considering a buy-in or buy-out transaction, preparation is key to ensuring a successful and cost-effective project. There are several areas that trustees should be reviewing now to help any risk transfer project run smoothly and also to achieve the best pricing from the market:
- Ensuring Scheme documentation is in good order
- Preparation of a full, legally reviewed benefit specification
- Review of existing membership data and collect any missing data items
- Feasibility analysis.
Not only will these steps save time and reduce costs, they are vitally important to enable schemes to demonstrate to the insurance market that they are serious about transacting when seeking quotations.
We actively monitor pricing across the market and provide regular updates on both insurer trends and pricing. Together with our advanced funding level monitoring for schemes, this work helps us identify pricing opportunities in the market and enables us to secure a quick transaction at the optimum price when these opportunities present themselves.
The risk transfer marketplace is constantly evolving, and the potential use of consolidation vehicles is one for consideration by trustees. Our knowledge of the market and early engagement with providers can help us demystify the options for schemes and advise trustees on all options.
We work with clients of all sizes to help manage their scheme liabilities in the lead up to a risk transfer exercise. This can include undertaking pension increase exchange and enhanced transfer value exercises, delivering material reductions to scheme liabilities and by association funding obligations. More often it involves a series of exercises to consolidate and simplify complex benefit structures, which insurers find difficult to price attractively, or administer.
When undertaking any liability management or consolidation exercise, it is essential to consider the scheme’s end game. Insurers will always ask what liability management exercises have been undertaken for a scheme when pricing for a buy-in policy. Ensuring any exercises do not result in insurers pricing against the scheme is a critical step of planning any liability management exercise.
We advise on investment strategy at all phases of the risk transfer journey, so that scheme assets are aligned with insurer pricing and funding level volatility is minimised. This allows trustees to plan effectively for a risk transfer exercise, ensuring schemes can achieve their funding target and do not subsequently experience a funding level fall (relative to the buy-in price) and fail to transact.
We advise clients throughout the transaction, from initial de-risking and working closely with insurers to match the price-locks that are often used between quotation and completion.
