Hymans Robertson has advised the £150m Institution of Engineering and Technology (IET) superannuation and assurance scheme on a £32m medically underwritten buy-in with a specialist insurer. This ‘top slice’ buy-in, completed earlier in 2015, covers the pension scheme’s highest liability pensioner members.
In common with many of the UK pension schemes, the trustees and the IET recognised that their scheme was exposed to a significant concentration of risk, with a small number of pensioners representing a very large proportion of their liability. Their objective was to tackle this risk in a cost-effective way to improve member security and reduce financial volatility. The trustees used Hymans Robertson’s medically underwritten buy-in service, which was launched in 2013 with MorganAsh, to complete this transaction.
“The trustees are delighted to have been able to insure the section of its pensioner liabilities that represented the greatest concentration of risk. Furthermore, to complete this insurance at a highly competitive price that was close to our technical provisions reserves is a great outcome for all scheme members.” – Harold Lewis, IET independent trustee fromBESTrustees plc.
“Pricing has been such that the IET scheme, and pension schemes more generally, could exchange gilts – a broad matching asset – for a medically underwritten buy-in – a perfect matching asset, including protecting against life expectancy and proportion married risk – without any cost implications nor any need to increase company contributions. Medically underwritten buy-ins have now covered around £2 billion of liabilities across well over 50 pension schemes, from a standing start in 2013.” James Mullins, partner and head of buy-out solutions at Hymans Robertson.
“With long-term risk reduction a shared goal for the scheme and sponsor, the ability to execute a partial buy-in and reduce risk without a liability premium falling on the employer has been a welcome step from the IET’s perspective.” – Ed Almond, IET director of finance and planning.
Working with MorganAsh, Hymans Robertson has been one of the pioneers of the medically underwritten buy-in market, recognising the significant benefit for its pension scheme clients. The popularity of their medically underwritten buy-in service means that Hymans Robertson has been involved in over 25% of the medically underwritten buy-in activity to date.