Medically underwritten buy in
29 May 2014
A buy-in using medical underwriting information obtained from individual members for one of LawDeb Pension Trustees’ clients has been successfully concluded.
The buy-in was initiated as a way of contributing to the scheme’s de-risking because the trustees received advice from their actuary that the life expectancy being experienced by members was shorter than might have been predicted based on their age, level of pension and location of home.
The purchase of these medically underwritten annuities meant that enquiries about the members’ health were made prior to agreeing a price that was able to predict life expectancy more accurately. Each member was asked to complete a short questionnaire which was followed by a telephone conversation if the insurer felt this would be useful. The result of the detailed underwriting exercise, allowed the scheme’s liabilities to be insured and was achieved without requiring additional funding from the sponsoring employer.
The scheme’s trustees, which include LawDeb Pension Trustees represented by Michael Chatterton, worked with professional advisers and engaged specialist annuity underwriter Just Retirement.
Following completion of the deal, Michael stated:
it was good that we were able to use medical underwriting to de-risk and that the experience of LawDeb Pension Trustees could be used to help complete this innovative agreement. It enhances the security of members, strengthens the funding of the scheme itself and mitigates cost for the sponsoring company.