The launch of a deferred bulk annuity product in Ireland represents a ‘new opportunity’ for defined benefit (DB) schemes in the country, according to LCP.

The consultancy described the launch of a deferred bulk annuity product from Irish Life Insurance as a “significant development” that would provide trustees with greater flexibility when considering long-term de-risking options and endgame strategy.

Following Irish Life Insurance’s product launch, LCP said it expected other insurers to follow suit.

Its report, Ireland Deferred Bulk Annuities, noted that the addition of a bulk annuity product meant that bulk annuities were no longer exclusively for very mature schemes.

The changes were expected to be most relevant to pension schemes that were well funded, closed to accrual, and had a long-term objective to wind up the scheme.

For relevant schemes, LCP outlined recommended steps, beginning with a feasibility assessment to determine the likely impact of a bulk annuity on the scheme.

If a bulk annuity was deemed worthy of further consideration, the consultancy highlighted the importance of engaging with the insurer to get an accurate price assessment and ensuring that scheme data is accurate and clean.

The report added that high interest rates and potentially attractive annuity pricing meant trustees should be aware of the impact for their schemes.

“To date, bulk annuity activity in the Irish market has been limited to pensioner-only transactions,” LCP stated.

“The launch of a deferred annuity product now allows deferred members to secure their future benefit payments and has the potential to accelerate the period to ultimate settlement.

“The availability of a bulk annuity product for deferred as well as immediate benefits is a potential game changer for many pension schemes.”

---