How technology is transforming pension risk transfers

Recent movement in gilt yields has buoyed the bulk purchase annuity market, with demand expected to remain high for the next few years. As the market grows, pension risk transfer (PRT) technology is becoming a critical enabler for schemes and insurers seeking to de-risk efficiently and accurately.

With insurer capacity a potential roadblock for schemes pursuing buy-ins or full buyouts, being able to demonstrate high-quality data and validated benefit calculations through digital audit and automation tools can be the difference between securing insurer engagement or being left waiting in line.

There are tools in the market that help smooth this what can often be a prolonged process however, offering schemes a competitive edge as they seek to arrive at transaction-ready status much faster.

How technology is helping smooth the risk transfer process

Auditing data and member benefit calculations can be a complex process - and this is where pension risk transfer technology plays a vital role.. The complexity arises from diverse data sources, intricate calculations on top of layers of regulatory compliance requirements. Traditionally, audits have been a manual process, often via Excel, which as well as time-consuming can be error prone. Due to their meticulous nature, this can often lead to extended timelines and resource-intensive efforts.

Automated tools are paving the way to a smoother, speedier journey to accurate data. This in conjunction with powerful rules-based calculation engines are re-defining the length of time pension schemes and Insurers need to arrive at a successful de-risking position, as well as bringing a high level of precision to the process. 

As the industry faces up to resource constraints, this could be a real differentiator for pension schemes.

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Tools like Heywood Passport are helping re-define the pension de-risking process, utilising data analytics that lets schemes review groups of data rather than line by line. Intelligent insight functionality helps users drill down into the data far quicker, giving schemes clear and accurate overview of data quality.

Rules-based calculations engines are also helping pension schemes expedite the buy-in buyout process. The ability to define benefit rules and automate them has emerged as a real game changer for all sized schemes.

Pension risk transfer tools to gain a competitive edge

With capacity already a concern, time is of the essence. Pension schemes that leverage PRT technology and automation to expedite audits can gain a competitive edge. They can present themselves as efficient, reliable partners, ready to execute transactions swiftly and accurately.

The advantages of quicker audits extend beyond transaction speed. Pension schemes that can offer a streamlined process are more likely to attract insurers looking for hassle-free partnerships.

With bottlenecks in the market, schemes must be aware that they’re competing for Insurer attention. Being prepared is the key to starting your buy-in buy-out journey, and data and calculations should be your first port of call.

Technology is helping shorten what can be a prolonged process. By embracing digital innovation in pension risk transfer, schemes benefit from efficiency, accuracy, and insurer confidence in a competitive market. These plans can speed up transactions, improve accuracy, and be trusted partners in managing and reducing risk.

Discover how Heywood Passport supports data accuracy and confidence in pension risk transfers.
Learn more about Heywood’s pension risk transfer technology