FOR FINANCIAL ADVISERS AND 
DEFINED BENEFIT PENSION SCHEME TRUSTEES ONLY 

Large Individual Defined Benefit Annuities (LIDBA) are risk management tools for Trustees of defined benefit (company) pension schemes. They work by shifting the burden of large individual pension liabilities to help increase the financial stability of the scheme.

Large individual pensions (typically £60,000 a year or more) are simply insured through a Legal & General LIDBA to reduce their burden on the overall pension scheme. Trustees are effectively deciding to pass on the risk posed by these liabilities so that the scheme benefits from greater financial security. Or as we like to think of it: Insuring to Ensure (the scheme's future).

By individually underwriting these liabilities, the level of reserves required by the scheme is known more precisely and Trustees can often find that they enjoy more investment freedom as a result of not having to exercise as much caution. The financial burden of increasing life expectancy is also passed on.

LIDBAs benefit the scheme (rather than individual members directly) by providing regular cash flows to offset pension payments. In our experience there is often sufficient goodwill amongst the members in question to gain their consent to releasing their doctor's report. LIDBA Support, a specialist service provided by Legal & General, is available to help.

LIDBA won't restrict the increasingly popular option for Trustees to buy out their defined benefit liabilities through Bulk Purchase Annuities (BPA). In fact LIDBA is a natural first step, with large individual liabilities often proving a sticking point in the BPA process.

The issues raised by LIDBA can be complex and Trustees will need to talk to their professional advisers and actuaries before proceeding.

If you would like to speak to us about LIDBA and its suitability for your scheme, please call 
Blake Dempster on 07758 083705 or email him at blake.dempster@landg.com.