Marvin OnumonuPension schemes need to start preparing early for buy-in if they want to avoid long delays moving to buy-out, Hymans Robertson said in its latest paper.
Research found that 76% of professional trustees saw delays after full scheme buy-in, with the average delay at six months and some schemes waiting over two years.
The firm said these delays could be avoided with the right groundwork.
A sticking point mentioned for insurers was data, as they need to process all member benefits after the pension scheme is transferred and poor data can slow down the whole process.
Bad data may also result in incorrect member quotes, which can cause claims and further delays.
Hymans Robertson said schemes should start early and have a clear plan for data improvement.
Christine Cumming, head of buy-out and wind-up transition services at Hymans Robertson, said: “We are seeing a strong move towards buy-out for pension schemes, and our research showed that of the schemes we surveyed, those that had completed their final full-scheme buy-in, 97% are now looking to move to buy-out within the next 5 years.
“With demand rising and delays becoming increasingly common in the buy-out market, it’s crucial that schemes prepare early to get ahead of the curve.
“The trend in the market is clear to see; in 2020-2022, around 50 buy-ins converted to buy-outs each year.
“This rose to 75 in 2023 and was more than 100 in 2024.”
Cumming added: “Insurers have innovated to meet this demand in several ways.
“These include expanding post-transaction teams, investing in technology, and reviewing governance structures.
“They are continually exploring areas where they can improve their processes.”
She said: “One message we hear loud and clear from insurers is that pension schemes have not done enough to prepare to move quickly from buy-in to buy-out.
“Good quality data is a key area which can have transformational benefits for the process.
“We have heard anecdotal evidence from insurers of multiple changes, in some cases as many as 30 – prior to a final data set being agreed.
“This has adverse impacts on both the timing and costs, as well as potentially leading to knock-on effects for members.”
She added: “Specialist advisers have the relevant experience in the buy-out market and understand the needs of both schemes and insurers.
“Combined, this can be a powerful tool when schemes want to progress through the buy-out process at pace.
“Having advised schemes, both large and small, through numerous buy-outs, we regrettably see delays becoming the norm in the buy-out market where preparation was not started early enough.
“Getting good quality advice – and taking advantage of this knowledge – is more important than ever for a scheme looking to buy out.”
