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Risk Transfer TV - XPS in conversation with Paige Wilson from Legal and General

Risk Transfer TV - XPS in conversation with Paige Wilson from Legal and General

21 Apr 2020

XPS’s Ash Williams talks to Paige Wilson at Legal and General about the bulk annuity market, how they prioritise transactions and tips for pension scheme trustees

Ash Williams: Hello, and welcome to XPS Risk Transfer TV. I'm Ashley Williams from the XPS Derisking team, and today I'm joined by Paige Wilson from Legal and General, and Paige has come in to talk to us a little bit about the bulk annuity market. Welcome Paige.

So my first question is, thinking about the number of bulk annuity transactions in the last twelve months, is there anything that can stop or impede this market?

Paige Wilson: Thanks for having me. It's great to be here. So 2019, as you know, was another record-breaking year with 40 billion pension liabilities being transferred to UK insurers, very much characterized by very large deals, and in this year we're already seeing over 30 billion of transactions coming up.

Ash: So in this very busy marketplace, what would your top tips be for trustees bringing a scheme to the market?

Paige: That's a really interesting question because we actually declined two out of every three transactions last year. So we have to prioritize which ones that we're going to accept. Having that in mind, some of the things that we look at are data, needs to be clean and complete. We definitely prefer schemes to have done GMP reconciliation and had a thought about GMP equalization and then we would like the benefits spec to be legally reviewed. This is really important so we can be crystal clear and understand what we're being asked to ensure. And then we prioritize schemes that demonstrate commitment to the transaction; so have they got a time plan laid out against governance? Have they got a price target? Have they done a feasibility study and are the sponsor and the trustee supportive of the transaction?

Ash: Would it be fair to say that those items you listed before, they're even more important for smaller schemes?

Paige: Of course, yes, absolutely, and L&G like to transact between from the smallest to the largest schemes. One thing that we would highlight is being flexible and working with an insurer's timetable will increase your chances of transacting.

Ash: I think that was really helpful hearing Legal & General's views on how they prioritise transactions in a busy bulk annuity market. It's clear that schemes need to be well prepared before they approach the insurance market and in particular for smaller schemes. So thank you very much for joining us, Paige.