Bulk Insured Pensions - A Good Practice Guide - NAPF

ABI GOOD PRACTICE GUIDE 19
d. The scheme trustees should review their timetable, plan and overall strategy
and confirm with the employer that the process continues to have the trustees’
support. It is helpful to inform insurers that the employer and trustees are in
agreement of the strategy.
e. Trustees and their advisors should undertake a thorough and comprehensive
review of the member data and benefit specification. Particular focus should
be on any discretionary powers, benefits for children and dependants and
guaranteed terms for member options within the scheme rules. Some scheme
benefits may be uninsurable and these may need to be converted by the trustees
into benefits that can be insured.
f. Completing the data review at this stage will minimise the possibility of future
fluctuations to the price as a result of changes to data and specification emerging
at a later stage. The process also gives confidence to the insurer that few changes
are likely to emerge in future and thus reduces any uncertainty premium required.
The timescales for such a review will vary depending on the size of the scheme,
the record keeping of the administrators and the length of time since the last
such review was carried out. It should be noted that changing membership data
materially during a quotation process is a major issue for insurers, as it may impact
their assessment of the scheme’s mortality. Trustees should therefore seek to avoid
membership changes through data cleansing and preparation up front.
g. Ideally, at this stage the trustees would share initial asset information with
the insurers so that any asset transition issues can be dealt with in good time.
Sharing this information can allow transition planning to commence and
possibly identify approaches that can reduce the expense of selling assets.
Insurance policy terms should be reviewed and any open questions highlighted
to avoid delay at the final stage. On receipt of the quotations the trustees would
move to the final review stage (see Section 4).
Delays are sometimes unavoidable, but insurers are unlikely to be prepared to
continually update quotations without a full understanding of the reasons for the
delay, as well as an expected timetable to finalising the deal. In these circumstances
it would be advisable to seek broad indicative updates so as to monitor the
affordability whilst maintaining the goodwill of the insurer.