United Kingdom

Risk Settlement

Navigating risk reduction for schemes of all shapes and sizes

Martin Bird
In this evolving market, Aon is well placed to help trustees and sponsors navigate the settlement market to find the solution that best meets their needs
Martin Bird, Head of Risk Settlement
 

Choosing the best risk reduction strategy can prove challenging. Our experts help trustees and sponsors understand their motivation for risk reduction. We analyse each pension scheme's unique position and ensure adequate preparation is undertaken, and we have settled risk using our full range of solutions for pension schemes of all shapes and sizes, consistently implementing the best solution at the right time.

If you are new to pension scheme de-risking, our guide will take you through the step-by-step process, explaining what it means to take longevity and demographic risks out of a defined benefit pension schemes. The guide also includes highlights from our exclusive research on the impact that behavioural biases have when addressing pension scheme risk. Being aware of these makes it easier to navigate the best de-risking route for your scheme.

2018 was a record year for the bulk annuity market, with over £25Bn of risk being transferred. 2019 has continued where 2018 left off, with several multi-billion-pound deals being completed in the first half of the year. This included the largest ever UK buyout – The Rolls Royce UK Pension Fund, who completed a bespoke pensioner transaction more than £4.6Bn for which Aon were the lead advisor to the trustees. There is also an increasing flow of buy-in and buyout deals in the smaller and mid-market range.

In the longevity hedging market, Aon is widely regarded as the leading settlement adviser, having advised on more than half of pension scheme longevity risk transferred to date.

Preparation is key to avoid disappointment.

With rising demand, and the number of mega-deals expected to reach an all-time high in 2019, insurers can be more selective about the schemes that they choose to price. Insurers will continue to focus their resources on transaction-ready schemes, particularly at the smaller end of the market, and so a clear de-risking objective and thorough preparation will be key to attract the very best pricing available.

Our success is driven by the personal, tailored approach from our dedicated team of consultants and our key bulk annuity services:

  • Bulk Annuity Compass – our complete bulk annuity service positions our clients of all scheme sizes to get the best possible value from an annuity, Compass is designed to maximise insurer engagement, and deliver the best possible pricing
  • Pathway – use of pre-negotiated contract terms, offered in conjunction with Eversheds Sutherland LLP

Over 2018...

Aon Advised:

 

Lead adviser to Schemes carrying out over £500M of Risk Settlement transactions from 1 January 2014 to 31 December 2018*

Lead adviser to schemes completing £100M+ transactions in 2018**

*based on disclosed data

**based on disclosed data – typically only published for larger deals

If you would like more information please contact the Aon Risk Settlement Team.

 
Recognised Success across the pensions industry
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