Achieving a swift and complex buy-in

In an increasingly complex pensions landscape, where securing members' benefits is the destination of choice for many schemes, Barnett Waddingham recently faced one of its more challenging and time-sensitive projects to date. 

This case study demonstrates how our expertise, persistence, and innovative approach led to a remarkable outcome for a pension scheme that initially seemed too complex for insurers to take on.

A time limited opportunity

Barnett Waddingham has been the scheme actuary, investment adviser and administrator for the staff pension scheme for a prominent professional institution for a number of years. Throughout this time, we have worked with the trustees and the employer to improve the scheme’s funding position, in line with its overall long-term objective of securing a buy-in transaction.

Following focussed preparation work, the scheme formally approached the market in Q1 2024. However, it was confronted with an exceptionally busy risk transfer market and demand for the scheme was further reduced due to various scheme benefit complexities.

Our risk transfer team was able to utilise our strong relationships with the insurers in the market to find a good solution for the scheme. This was a time-limited opportunity and required some out of the box thinking. 

There was a short-lived pricing opportunity, and we were delighted to partner with the trustees and company to navigate these challenges swiftly and effectively to lock into great pricing. 

In short, we were faced with:

• Improving the security of the scheme's benefits.
• Reducing the risks associated with managing the pension scheme.
• Navigating a busy risk transfer market.
• Addressing complex benefit issues within the scheme.

Our solution

The scheme initially faced rejections from the market, with insurers citing resourcing constraints and the complexity of the scheme’s benefits as reasons for not proceeding. 

We partnered with one insurer and developed an adapted version of their streamlined service to get their engagement. Our integrated advice approach meant we were able to work quickly to develop an innovative solution that tackled the benefit complexity issue. This involved:

• Augmenting benefits to smooth out some of the complexities, while keeping costs low.
• Planning a route to change some benefits through actuarial equivalence.
• Altering the data to fit with the new benefit structure and the insurer's requirements.

All of the above were also completed in the context of exceptionally tight timescales – with only three weeks between receiving the initial quotation and signing the contract. During this time we advised on:

• Suitability of the deal versus the trustees’ objectives.
• The financial strength.
• The accuracy of the price and capturing this detail in the execution documents.
• Negotiating better than standard terms to ensure the buy-in contract would help them achieve an effective wind-up of the scheme.
• Implementing a price lock and lining up the premium payment. 

It also required great consulting skills to get the trustees (none of whom were professionals) and company comfortable with the deal in such a short time.  

Delivering a successful outcome

We were thrilled that our swift action and innovative approach allowed the trustees and company to lock into great pricing and terms, to ultimately meet their objectives in record time. 

Despite numerous challenges, the results of our efforts were exceptional. We successfully guided the scheme to complete a £35 million full scheme buy-in, securing benefits for all 300 members. This transaction not only enhanced the security of the scheme's benefits, but also simplified the management process for the trustees.

Most remarkably, we accomplished this feat in an accelerated timescale – just six weeks from the initial quote request to completion, a process which more typically can take in excess of four months. On top of this, the deal was also done through a streamlined process with some adaptions: this is a testament to the evolution of the market to deliver for smaller schemes. 

"Barnett Waddingham have been excellent throughout the risk transfer project for our scheme. The team worked collaboratively and were clearly joined-up, ensuring their advice was clear and everything in the project progressed as needed. We were well supported throughout and felt well informed to make the decisions required of us, despite the quick timescales involved."

"We are delighted to have led this transaction. We achieved this despite the risk transfer market being exceptionally busy, and the scheme having a number of complex benefit issues to overcome. Our team's persistence in challenging insurers' initial rejections was key to making this deal happen. It was a fantastic team effort, which we are very proud of."

Our key achievements

• Completed a £35 million full scheme buy-in with great pricing and better than standard terms.
• Secured benefits for all 300 members of the scheme.
• Significantly improved the security of the scheme's benefits.
• Streamlined the management process, making it less risky and more straightforward.
• Accomplished the transaction within just six weeks from the initial quote request.
• Achieved this milestone despite market challenges and complex benefit issues.

This transaction exemplifies Barnett Waddingham's ability to handle complex pension scheme transactions, even when faced with significant obstacles. Our success in this instance was built on several key factors:

• Persistence: We refused to accept initial rejections, instead challenging what the insurers could deliver and demonstrating the deal's viability.
• Expertise: Our comprehensive understanding of the pension and risk transfer landscape allowed us to develop innovative solutions to complex benefit issues.
• Efficiency: By leveraging streamlined processes and maintaining a sense of urgency, we completed the transaction in an accelerated timescale to secure great pricing and terms.
• Collaboration: Close partnership with all stakeholders ensured alignment and swift decision-making throughout the process.