The FINANCIAL — Mercer has launched the Mercer Pension Risk Exchange, an online marketplace aimed at revolutionising the bulk annuity market for defined benefit (DB) pension schemes in the UK.
The first of its kind in the UK, the Exchange provides sponsoring employers and trustees seeking to complete a buy-in or buyout transaction during the next few years with access to the management information they really want and need. The Exchange sources pricing and terms produced directly by insurers on a monthly basis, based on a scheme’s actual benefit structure and individual member data, according to Mercer.
The consultancy launched the platform in the US in June 2015 and also plans to launch the service in Canada.
“The Exchange gives decision-makers the information they need to act with confidence. It sources actual real-life insurer pricing, not indicative pricing estimated by an adviser” said David Ellis, UK Leader, Bulk Pensions Insurance Advisory at Mercer. “If you have ever wished you could obtain pricing produced directly by insurers, specific to your pension scheme, on a regular basis – then now you can. Even if in many cases you do not intend to transact for a few years. It’s a leap forward in the management of DB pension risk.”
The launch builds on Mercer’s established position as a leading adviser in the UK bulk annuity market. The consultancy has led on more than 175 transactions with aggregate premiums of over £16 billion – representing around a quarter of all such transactions ever in the UK by premium volume. Mercer has also been lead adviser on 7 of the 10 largest buyouts ever in the UK including lead on all four buyout transactions above £1 billion.
According to Alan Baker, Partner and Head of Mercer’s UK DB Risk team: “Many companies have the appetite to transfer pension risk off their balance sheet but they face barriers: lack of clear information about the true cost of a buy-in or buyout, limited transparency, the fluctuation of market rates and scheme economics to name but a few. Mercer Pension Risk Exchange empowers sponsoring employers and trustees to be more strategic and sophisticated in their approach and to know that they are executing a buy-in or a buyout at the best time for them and at a competitive price. This is the only solution that provides genuine scheme specific pricing by insurers.”
Phill Beach, Director of UK Pension Risk Transfer for Core Business at Legal & General said, “The pension de-risking market is entering an exciting period with a lot of innovation. I believe this new technology platform will lead the way in helping clients understand market pricing and most importantly the point at which transacting works best for the scheme. Timing can often be the most important factor in realising best value.”
Costas Yiasoumi, Director of Defined Benefit Solutions for Partnership, added: “For the first time the Exchange brings a market place approach to bulk annuity sales and purchases. It matches pension scheme demand and insurer capacity in a way not done before. This will support purchase decisions by trustees, capacity allocation by insurers and in the end real transactions, all of which can only be beneficial.”