Just Group, born from the merger of annuity providers Just Retirement and Partnership, has launched DB Choice, a defined benefit (DB) de-risking product for pension schemes.
The provider will offer pension scheme trustees and sponsoring employers two guaranteed prices at the point of quotation, for standard and medically underwritten options.
The latter includes a discount to the standard price, based on the average reduction in premium Just expects to achieve after collecting medical data.
Where the medically underwritten option is selected, medical and lifestyle data is collected post-transaction, but there is no subsequent impact on the premium whatever the outcome of the medical underwriting process.
According to Tim Coulson, director of DB solutions at Just Group, medical underwriting “offers trustees an attractive financial benefit, but in the past trustees have not been able to quantify the value of that benefit at the start of the de-risking process”.
He said: “DB Choice gives trustees sight of a guaranteed medically underwritten price up-front before we contact their members to request medical data.
“Effectively, we’re removing any uncertainty about the price ahead of transaction and offering trustees a hassle-free guaranteed discounted medically underwritten price.”
Just’s new product is available for transactions containing 10-300 members, where the average liability for each member is less than £1m.
The provider said that for the first-time, standard pricing will be available for segments of 300 members and less - in addition to the new guaranteed medical price.
William Burrows, retirement director at Better Retirement, argued that “more competition in the bulk annuity market is to be welcomed, especially at the lower end”
He said: “It is difficult to get medical information from scheme members so this new product seems like a good idea.
“However, the devil is in the detail and the take up may depend on whether the reduction in purchase price for enhanced bulk annuity merits the extra work involved.”
In the first nine months of 2017, Just had £564m of new business for DB de-risking, a decrease of 2 per cent when compared to the same period in 2016.
On a quarter-by-quarter basis, DB de-risking new business spiked towards the end of the period, going up from £125m to £269m between the first and third quarter.
maria.espadinha@ft.com
