Just’s story reminds me of the huge take on of DB transfer business in the later years of quantitative easing when low yields mad CETVs so attractive that de-risking of pension schemes meant taking money into DC pots. This huge surge of business is also driven by gilt yields though it works the other way round. Nowadays, pension schemes de-risk by passing their assets (including the notional surplus) to insurers in return for first a buy-in and then a buy-out.
Andy Smith’s excellent post tells me that there comes a time when the bonanza comes to an end. That does not mean that those who profited from DB to SIPP transfers are suffering, firms like Tideway now sit on large portfolios of SIPPs and many of their clients will enjoy pension freedom. But the surge that came in early years at some point slows down. That is what is happening at Just and just as with the DB/SIPP bonanza, eventually the alternatives to de-risking become clear.
I would like to think that many DB trustees will be thinking going forward that de-risking is not necessarily in the member’s best interests, just as transferring out of DB schemes into SIPPs didn’t make sense once gilt yields ticked up. Indeed for many members of DB schemes, the SIPPs on offer were not suitable and many will wish in years to come that they had run on in the DB schemes they were in (most notably BSPS).
But let me not go to far, Just has not behaved shadily, if their is a criticism , it is that TAS 300 was not publicised by actuarial consultants and superfunds were not able to challenge the insurers. There may have been an advisory and regulatory failure since 2022.
I hope that we are moving into a more meaningful stage of the “endgame” when Just and the new insurers are made to work harder for new business and DB pension trustees are more informed about the choices that they have.
There are many other areas for Just to move into, one may be the insuring of DC defaults where self-insurance is not chosen via CDC. Rothesay have shown the way by winning the account of Nest but there are others and so long as people want the certainty of the annuity, there will be a large retail market for them to prosper.