Bulk annuity deals have accelerated significantly, with estimates suggesting 2025 will see a record number of transactions. The small to mid-sized scheme market has remained particularly strong across the 11 active insurers operating in the space. This shift in pace is forcing pension schemes, trustee boards, and advisers to rethink how they approach derisking. Transactions that previously took several months now complete in a matter of weeks, according to Stephen Richards, head of pensions and leader of Stephenson Harwood’s Derisking Pathway team.
Streamlined processes offered by consultants and insurers are simplifying the buy-in process, meaning straightforward transactions can be completed in a matter of weeks rather than months. At the start of this year, Mercer’s DB Master Trust completed three buy-ins with Just Group. The transactions were led by Mercer’s risk transfer team and the independent professional trustees that oversee the master trust, with legal advice given by Stephenson Harwood.
This collaboration helped the transactions move quickly, as it facilitated a streamlined process. This was further assisted by the collective experience of the three professional trustee firms that make up the Mercer DB Master Trust’s board: PAN Trustees, Independent Governance Group, and Zedra. The trustees completed a data cleanse for each of the three sections of the master trust before entering into the buy-in contracts—an unusual step, as this is often completed after buy-in.
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Completing the data cleansing work up front is not the standard approach, says Andrew Pugh, risk transfer lead for the Mercer DB Master Trust, but it has shortened the buy-in to buyout window, reduced the complexity of the true-up premium, and will allow us to progress more quickly to wind-up. This also meant the trustees had immediate clarity over the ultimate cost of the transaction—something that isn’t usually known until later in the process when data verification takes place after signing.
By transacting three fully segregated sections together we were able to capture economies of scale, securing insurer capacity and pricing that would unlikely be available to them as standalone schemes, Pugh adds.
An efficient transaction requires streamlined processes. Insurers and consultants have introduced these for small schemes over the past few years—and they are not the only ones. The market has changed, and so our processes have changed with it, says Richards. Stephenson Harwood has codified its approach to a changing bulk annuities market by introducing its Derisking Pathway. This process has been designed specifically for fast-moving transactions. The process uses recycled disclosure and reporting document templates as well as artificial intelligence tools to accelerate document review and reconciliation.
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In addition, the law firm’s process and experience mean it can help establish a legal framework with consistent contracts and benefit-specification templates, reduce duplication, and increase efficiency—as well as lowering costs. Estella Bogira, partner at Stephenson Harwood and leader of the Mercer DB Master Trust projects, praised the collaboration between multiple parties to get the deal over the line.
The whole Mercer DB Master Trust team, led by Tim Ball, and working very closely with Just, really are exceptional, she says. And our client, the trustees, have been outstanding—working alongside Mercer to develop a route that puts member outcomes first. Tim Ball, Mercer DB Master Trust lead, adds that The Mercer DB Master Trust was built to help employers run their schemes off efficiently, but thanks to this collaborative effort we’ve also created a streamlined route for employers looking to use the master trust as a bridge to buyout.
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