Just Retirement has launched a defined-benefit de-risking business targeting small and medium-sized businesses.
The provider currently specialises in the annuities and equity release markets.
It has entered discussions with employee benefit consultants about using medical underwriting to allow companies with DB schemes to pass on the longevity risk associated with their pension to the insurer.
Just Retirement direct of defined-benefit solutions Tim Coulson says: “Big deals may capture the headlines but the reality is that it is modest-sized schemes that make up the majority of the 6,400 schemes tracked by the Pension Protection Fund.
“The average buy-in/buy-out deal is for around £20m. This part of the market has multi-billion growth potential if compelling solutions can be offered.
“Smaller schemes face exactly the same problems as bigger ones but are not well served by the current providers for whom bigger deals are more lucrative. However, our underwritten solution can generate larger cost savings for more focused memberships compared to larger schemes where life expectancy will typically be closer to average.”
Hargreaves Lansdown head of advice Danny Cox says: “This makes a lot of sense. An accurate picture of longevity and liability should ensure fair pricing.
“The hurdle will be organising the underwriting of the members because owners and senior staff of SMEs are notoriously difficult to pin down for medicals.”