Smaller defined benefit (DB) pension schemes are still being successful in completing bulk annuity deals despite a busy buy-in market, LCP has stated.

The consultancy noted that smaller schemes were still able to access competitive pricing from multiple insurers if they took the right approach.

To attract insurer attention, LCP described good preparation and a streamlined process as “essential”, noting that there was a wide range of pricing between different insurers for any given process, with the highest and lowest prices often differing by more than 5 per cent.

The savings from using the correct competitive process can be “significant” and, even for smaller schemes, can add up to hundreds of thousands of pounds, according to LCP.

It warned that trying to ‘cut corners’ with the process will likely be a false economy, as the savings from approaching the market in the ‘optimal’ way with multiple insurers outweighed the additional costs involved.

The consultancy urged smaller schemes to take four ‘key steps’ when seeking pricing to put them in the best position to attract insurer attention: Engage early and be flexible; leverage the risk transfer adviser’s reputation; be focused on ‘key asks’; and do not feel the need to rush into the market.

“Against the backdrop of an exceptionally busy market and the challenges faced by many smaller schemes to engage insurers, we are extremely proud to have helped so many smaller schemes stand out from the crowd, obtain competitive pricing from multiple insurers, and successfully transact,” said LCP partner, Imogen Cothay.

“Insurers are increasingly selective on which advisers they work with, and confidence in that adviser and their transaction process is a key factor when insurers are deciding whether to participate.

“This is particularly true at the smaller end of the market which saw the number of schemes seeking pricing double in the first half of this year alone.”

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