Small well-funded defined benefit (DB) pension schemes could secure attractive buy-out terms thanks to a collaboration between KPMG Group Insurance (KPMG GI) and Mobius Life.
Many schemes, wanting to secure their members’ future through buyout, are unable to do so as insurers are not able to offer them bulk annuities on competitive terms. Now KPMG GI and Mobius Life have collaborated to enable small schemes to ‘notionally’ combine to get their collective liabilities to a size where they are an attractive bulk annuity proposition for an insurer. The solution offers schemes more choice of insurer and faster implementation.
Under the collaboration KPMG GI supports the scheme and its advisers by being the interface to the market. Mobius Life uses its institutional pension platform to provide asset transfer services to ensure that the schemes’ assets are buy-out ready. The schemes do not consolidate their liabilities. Each individual scheme’s benefit structure is maintained and receives its own insurance policy.
Mobius Life and KPMG GI will collaborate when it is in the best interests of schemes to achieve buy-out. The arrangement is not exclusive, and both firms will work with other providers and advisers to support their clients.
Adrian Swales, Chief Executive, Mobius Life, says: “Our collaboration with KPMG GI offers an innovative solution to DB schemes which would benefit from buy-out but are too small to secure competitive terms. We believe that many of the UK’s DB schemes with strong funding positions and supportive trustees could benefit.”
James Staveley-Wadham (pictured), Senior Manager, Pensions Insurance, KPMG GI, says: “There is a significant number of well-funded pension schemes that would benefit from moving to buy-out. At the same time insurers are unable to provide quotes for all these schemes. We can now help these schemes by joining them together through KPMG GI, along with having their assets on the Mobius Life platform, so that they are an attractive proposition to an insurer.”
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