Innovation from insurers is expected to result in faster wind-up processes for defined benefit (DB) pension schemes after risk transfer deals, according to Hymans Robertson.

Its paper stated that innovations, including insurer-led data and guaranteed minimum pension (GMP) work, technology investment, and improved processes, were reducing the post-transaction timeframe of DB scheme buyout journeys, with the potential to minimise delays to winding up schemes.

A Hymans Robertson survey found that around 75 per cent of wind-up projects were subject to delays, which the consultancy said was leading to uncertainty and increased costs for the sponsor.

Through insurer-led innovations, Hymans Robertson stated that more schemes may be able to reach buyout faster, providing more certainty on timelines and cost.

It called on trustees to review their wind-up strategies to ensure they were taking advantage of these ongoing innovations for the benefit of members.

“Over the two years, we’ve seen post-transaction delays become one of the most significant challenges for schemes targeting buyout,” said Hymans Robertson partner, Joanne Gyte.

“While securing a transaction remains a key milestone, the real test increasingly lies in getting schemes through the final stages efficiently and with confidence.

“Despite recently seeing the most buyouts ever completed, many schemes are still in the post-transaction phase. Around three in four of these projects have delays.

“Trustees and sponsors are beginning to recognise that a good transaction is no longer just about securing a deal at the right price, but also getting through the subsequent phases quickly, predictably and without costly delays.

“Without a clear and aligned approach to delivery, DB schemes risk delays that can increase costs, create uncertainty and impact member experience. It’s encouraging to see the market responding to this.”

Gyte added that insurers were beginning to take a more active role in addressing the practical challenges that had traditionally slowed progress, including piloting insurer-led approaches to GMP equalisation, introducing ‘fast-track’ journeys from buy-in to buyout, and investing in digital capabilities such as data interrogation tools and member-facing platforms.

“While it’s still early days for some of these innovations, they have the potential to make a meaningful difference,” she continued.

“If the market can continue to evolve in this way, we’re optimistic that DB schemes will be able to reach buyout faster, with greater certainty on costs and outcomes.

“For trustees and sponsors, this highlights the importance of thinking beyond the transaction itself.

“Having a clear plan in place, with aligned objectives and a well-defined approach to handling key risks and operational challenges, will allow a scheme to take full advantage of the emerging innovations and be critical to avoiding delays and ensuring a smoother path to buyout.

“While improving speed is important, it should be balanced with maintaining robust processes and strong governance throughout the post-transaction phase.”

---