Although there have been many developments in the pension risk transfer process in recent years, there is more that could be done in terms of both efficiency and effectiveness.
That is according to the Society of Pension Professionals (SPP), which has published Less friction, better transfers: creating a more agile risk transfer process, a new paper on how best to shape the future of the risk transfer process.
The SPP paper highlights the strides insurers have made in streamlining processes, and the welcome presence of new market entrants, but also provides examples of remaining challenges. This includes differences in templates and contractual terms, and that it should be feasible to achieve greater standardisation in these streamlined processes through cross-industry collaboration.
Likewise, pension schemes and their advisers can also improve their processes and develop innovative solutions to improve efficiency, although capacity within the administration market continues to be a constraint.
“As the paper and discussions amongst the SPP’s diverse membership make clear, overall, there is no single party holding up the process, but rather a combination of issues and challenges that impact insurers, trustees, advisers, and administrators differently,” said Steve Hitchiner, Chair of the SPP Risk Transfer Group.
“It’s no good saving time and resources on one part of the transaction if that simply leads to increased time and resources being needed elsewhere. So, for the risk transfer process to improve, all interested parties need to work on their particular issues, whilst simultaneously working collaboratively with associated partners in the process. We hope this SPP paper helps stimulate debate amongst all those involved, and that an even more efficient and effective process may be achieved as a result.”