Wayne, do you approach large and small schemes differently? Phelan: We have a strange relationship with the insurance mar- ket. When insuring your car, you put into the system that it is a car. But with these transactions we have to make a storyboard of how prepared and wonderful we are to be insured. We have to paint everything we have done to not only to express our seriousness but that we are not a big risk. It is unusual in that sense.


The capital-backed journey plans do not want to transact with weak sponsors because they do not want to become a


consolidator. Colin Cartwright, Aon


Schemes which have appointed a professional trustee are prob- ably engaged enough to think about these issues. Schemes which have not are going to struggle that little bit more. I have a client who has five defined benefit pension schemes on the path to full buyout. There is a timeline we share with insurers when we do a transaction which explains that another transaction or scheme will be coming down the line so come and talk to us about a price. That has been helpful.


possible so it is appealing to the insurers. As a result of the challenges smaller schemes face, we have developed a service called Pathway. Using pre-negotiated contracts and a carefully designed process, insurer engagement is maximised and smaller schemes get access to much better pricing and com- mercial terms. Perrella: It goes back to it being not just what you do before the transaction. The insurer will be involved during the data cleanse process and if the data is messy and the timeline is extended to complete the process there will be a lot of work for the insurer. That before and after is not just relevant for the trustees but for insurers, too. But some insurers do like smaller schemes, they like the diver- sification. They also like to provide a service to the whole mar- ket. I have never struggled with placing a well prepared small scheme. There will continue to be a market, it is just that the benchmark for what well prepared means has become more challenging.


Is pricing good at the moment? Hartree: It has been an interesting dynamic. At the backend of last year, a lot of business was written, but the market was quiet at the start of this year. Many insurers have half-year targets and want a good news story to share. They have not written that much. So there is good pricing as a result of insurer demand. Perrella: The market is getting progressively busier. A number of larger schemes hit the market this month. Depending on the geopolitical situation, it could be a repeat of last year which is good news for brokers. Barron: The market conditions aspect is interesting. Schemes have had a boost from rising interest rates if they have not fully hedged their liabilities and also from inflation rising if there are specific maximum limits on pension payments when infla- tion is higher. Credit is a little cheaper, which is also driving pricing. So do you have the right allocation to credit and can you lock-in that good insurer pricing even if buy-in/buyout is some way off? Pickering: Lucy, what is affecting the insurers’ ability to line up assets now that they may deploy later in the year against the background of geopolitical mayhem? Barron: They are looking for illiquid credit. As insurers line up those assets, having your scheme at the front of the queue, ready to transact, means you are getting better pricing because you are getting the benefit in pricing of those higher-yielding assets which is key. Pension schemes and insurers are looking at gilts, corporate bonds and illiquid credits, while assets with an ESG flavour are becoming increasingly important.


Is ESG compatible with what insurers look for in portfolios? Barron: Pension schemes are doing more in this area by setting policies on their expectations for ESG. There are certain things


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