Commenting on M&G’s launch of its Value Share Bulk Purchase Annuity with a c.£500m transaction, Iain Pearce, Head of Alternative Risk Transfer at Hymans Robertson, says:

“We welcome this innovation from M&G. With many schemes considering their preferred endgame, weighing up the merits of maintaining access to an anticipated emerging surplus against the risks associated with not settling, there will be many cases where trustees and sponsors have different views. The provider market has been working hard to allow stakeholders to achieve their objectives and it’s great to see M&G complete their first transaction under this value share offering. This solution balances the needs of both the members and the sponsor, providing members with the high level of security associated with a “traditional buy-in”. For the sponsor, in exchange for financial support, they have access to the anticipated emerging surplus from the pension scheme whilst still providing a high degree of comfort for the pension scheme.

“As we are seeing in the superfund market, the first wave of transactions for new solutions build confidence from potential buyers and smooth the path for others to follow. As a number of trustees and sponsors reassess their priorities, we expect these types of solutions to be interesting to many.”