Bulk annuity transactions can be impacted by challenges brought from company accounting without careful planning warns Hymans Robertson. With buy-in an increasingly common outcome for DB pension schemes, and growth looking set to continue in 2023, the importance of minimising repercussions through early planning and company engagement is vital.

The results of polling at a recent webinar held by the leading pensions and financial services consultancy, found that nearly two-thirds of trustees (61.3%) believed that the accounting impact can negatively impact buy-in transactions with the potential for unexpected financial impacts.

Commenting on the need to proactively consider the impact that company accounting can have on buy-in, Lara Desay, Partner and Risk Transfer Specialist, said:

“It is clear that early engagement is vital to help avoid accounting issues de-railing risk transfer strategies and plans. The earlier a scheme can work with the sponsor to consider the implications, the more this can help minimise any bumps and hurdles as the transaction moves towards completion.

“The results from our webinar poll found that nearly two-thirds of Trustees have examples where company accounting has impacted buy-in transactions, demonstrating that there is a clear need to minimise this risk.

“If corporates are able to clearly set out the objectives of a transaction, and document a strong rationale for their proposed accounting approach, this will facilitate any discussions with auditors. The more a company can forward plan, consider the accounting impacts and seek auditor agreement early to the proposed approach, the better positioned they will be able to minimise the chances of anything going wrong for the scheme’s buy-in project.”