Over the past 30 years, more than one million members of defined benefit pension schemes have had their pensions secured with insurance companies, such as Legal & General. These arrangements are known as pension buy-ins and buyouts, and they enable companies to honour the pension promises that they’ve made to their current and past employees.
The trustees of your scheme have chosen to secure your benefits with us. This means we are now responsible for paying your pension.
There is sometimes a degree of misunderstanding about pension buyouts: some people associate the terminology with a complex financial activity; and they may feel that the company they’ve worked for has “sold their pension on”.
While it is true that your company and trustees have transferred responsibility for paying your pension to us, the key point is that they’ve put in place an insurance arrangement that protects your retirement benefits.
The security of your pension
The security of your pension has been increased because your benefits are now protected by a regulated insurance company.
We must, by law, always have enough funds available to meet all of our financial responsibilities. These ‘capital requirements’ exist to make sure that we can continue to pay customers even in extreme economic conditions.
We hold a ‘capital surplus’ of several billion pounds which means that we’ve an additional buffer above the amount of capital that we’re required to hold.
We’re highly rated for financial strength by all the major ratings agencies. This shows that we’re financially strong, economically responsible and committed to business practices that will allow us to keep our promises to you.
And finally, if you’re a UK resident, your benefits should be covered by the Financial Services Compensation Scheme (FSCS), in the unlikely event that we can’t meet our obligations. Please note, FSCS rules may change in the future.
Further information can be found at: fscs.org.uk