Buyout
An insurance policy issued to each pension scheme member individually which enables the scheme to wind up
What is a buyout?
A buyout is a financial arrangement where an insurance company, like ours, takes over the responsibility of insuring benefits and directly paying members of a pension scheme.
This ensures that members’ benefits are secure and paid as promised, relieving the original employer from managing the complexities of the pension fund, and allowing trustees to wind-up the scheme.
Buyout at a glance
Removes the risks of investment, longevity, interest rate changes and inflation for the members covered by the policy.
Typically covers all members of the scheme, both deferred and current pensioners. We issue the member with an annuity policy and pay the member directly.
Additional cover can be bought to cover additional risks, for example missing beneficiaries and/or data errors, providing more certainty for trustees and sponsoring employers.
How a buy-out works
All buyouts initially begin as buy-ins. Once a scheme has secured all its member benefits, the scheme will typically transition to buyout over a period of time.
The pension plan’s trustees pay a premium to us for a buyout policy.
We promise to pay the pension benefits to the members as described in the policy, as well as providing cover for dependants.
Scheme and advisers complete data cleanse. During this phase, the buyout operates as a buy-in, ensuring a smooth transition and accurate reflection of member benefits..
We pay all pension benefits directly to members, including any additional benefits for dependants, ensuring their financial security.
Once members have their policies, we take on responsibility for administration and pay members their insured benefits directly..
Recent transactions
L&G Flow surpasses £1bn milestone
£4.6 billion buy-in with Ford pension schemes
L&G completes c.£1.6 billion buy-in with the BP Pension Fund
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Buy-in
An insurance policy issued in the name of the trustees of the pension scheme and held as an asset of the scheme.
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