U.K.-based pensions and financial services consultancy Hymans Robertson said it expected increased innovation by insurers, leading to a faster winding down of the Bundesbank pension scheme following the risk transfer deal.
In a recent paper, Hymans Robertson argued that insurer-led data and GMP efforts, investments in digital capabilities and improved processes are shortening the post-deal stage of the DB scheme acquisition process, potentially helping to address delays in scheme wind-ups.
Hymans Robertson said approximately 75% of closing projects experienced delays, causing uncertainty and increasing costs for sponsors. By leveraging growing insurance-led innovation, more plans may be able to achieve acquisitions more quickly, providing greater certainty around costs and timelines.
Hymans Robertson called on trustees to review their winding up strategies to ensure they leverage these ongoing innovations for the benefit of scheme members.
Joanne Gyte, partner at Hymans Robertson, commented: “For two years now, we have seen post-deal delays emerge as one of the most significant challenges facing acquisition programmes. While securing a deal remains a key milestone, the real test increasingly lies in getting programs through the final stages efficiently and confidently. Despite the highest number of acquisitions ever completed recently, many programs are still in the post-deal stage. Around three-quarters of these have experienced delays.
“Trustees and sponsors are starting to realize that a good deal is no longer just about getting the deal done at the right price, but also completing subsequent stages quickly and predictably without costly delays. Without a clear and consistent delivery method, DB schemes are at risk of delays that increase costs, create uncertainty and impact member experience. It’s encouraging to see the market react to this.”
Insurers are starting to take a more active role and address the real challenges that have historically hindered progress, Gate said.
She continued, “This includes piloting an insurer-led approach to GMP parity, introducing a ‘fast track’ journey from buy-in to buy-out, and investing in digital capabilities such as data query tools and member-facing platforms. While some of these innovations are still in their early stages, they have the potential to make a meaningful difference. If the market can continue to develop in this way, we are optimistic that DB schemes will be able to achieve buy-out faster and with greater certainty around costs and outcomes.”
“For trustees and sponsors, this highlights the importance of thinking beyond the transaction itself. Having a clear plan, aligned objectives and a clear approach to dealing with key risks and operational challenges will enable plans to take full advantage of emerging innovations and is critical to avoiding delays and ensuring a smoother acquisition path.
“While increasing speed is important, it should be balanced with maintaining robust processes and strong governance throughout the post-deal stage. A well-managed journey strives for what we call FAST: frictionless, consistent, streamlined and timely. This will ultimately lead to better outcomes for trustees, sponsors and members, particularly where clear timelines and expectations can be maintained.”
