The growing pension buy-out market is bringing greater attention to the service provided by insurers after pension schemes have transferred their liabilities.
Financial strength and the ability to complete a transaction remain important when selecting an insurer, but the experience of pension members after a buy-out is also becoming a key consideration.
Once a buy-out is completed, the insurer becomes responsible for paying members their pension benefits. This relationship can continue for many years, meaning the quality and reliability of member services can have a long-term impact.
Service standards can vary between insurers. Members may experience differences in how quickly retirement quotations are provided, how efficiently transfers are handled and how quickly issues are resolved.
There have also been instances of delays in providing benefit quotations and problems with pension increases being applied late or incorrectly. As more pension schemes complete buy-outs, the number of members affected by differences in service standards could increase.
One of the difficulties for trustees is comparing insurers on the quality of their member services. Insurers already collect significant amounts of operational and customer information, but there is no consistent set of publicly available measures specifically covering buy-out policyholders.
A standardised approach to reporting could provide trustees with more information before selecting an insurer. Possible measures could include the time taken to provide retirement and transfer quotations, the time required to settle payments and how efficiently member deaths are handled.
Law Debenture Corporation plc (LON:LWDB) provides a wider range of services including corporate and pension trusts, process agent services, treasury management, corporate services including for special purpose vehicles, structured finance administration and whistleblowing services.
