Member experience has become a key factor for trustees deciding which insurer to pick for a pension risk transfer, as surplus allows boards to look beyond price alone. Insurers are investing more in this area in response, a new survey suggests. 

A new survey by consultancy Aon, covering the 10 insurers currently active in the market, found that they have invested in member-facing capabilities over the past 12 months as member experience has emerged as a prominent feature of the buyout tender process. 

‘Insurer views on member options and support post-buyout' said this continues a trend identified last year. Aon said while pricing remains important, trustees and sponsors “are increasingly able to look beyond purely cost and, if possible, improve the member journey”.

Aon’s head of member options and support Kelly Hurren said the work with her clients suggests member experience needs to be treated as a distinct workstream when trustees and sponsors are considering a buyout.

“Thankfully, this survey shows that the ongoing service that members will receive is now a much more prominent consideration in the buyout process than it was even just a few years ago,” she said.

“For trustees and sponsors, the key is to be clear about their priorities. When schemes have strong views on the support and options they want members to be able to access in retirement, they should make these expectations explicit when engaging with insurers. The market is evolving quickly, and insurers are increasingly responding to that demand,” she advised.

Insurers are investing in digital tools, retirement support and member options, according to Hurren. 

Aon found that all insurers surveyed now have a self-service online administration portal, and a third have also developed a fully digital retirement process. Insurers said the latter was the most important priority. 

Insurance companies are also offering flexibility to members as nine of 10 are prepared to provide a bridging pension option at retirement. A bridging pension smoothes total pension income over time for those who retire before state pension age. Aon previously observed that BPOs have become more popular among schemes since 2020, with 70% growth in 2023, and more than half of members typically choosing to take up the option when offered. 

However, while bridging pensions are now available from most buyout providers, they remain less likely to offer pension increase exchange – where members give up future inflation uplifts for a higher pension income up front. Most insurers are still only considering whether to offer this, according to Aon.  

The survey identified access to independent financial advice as the least developed area, perhaps unsurprisingly as this is also less common among pension schemes before buyout. Just one insurer has done preparatory work for members to access advice at preferential rates, while others are exploring the feasibility of lower rates for advice where schemes want this.