Pension buyout and de-risking

Considering a buyout, buy-in or a longevity hedge? We can provide insights on how solutions in this developing market can enable you to consider de-risking your final salary pension scheme and other related employee benefit programmes.

Pension scheme buyouts, buy-ins and longevity hedging have become important aspects of managing pension risks. Our team assists you in developing solutions that fit client requirements and don't force a single approach. Key areas where we help clients include:

  • Feasibility studies
  • Exercises to obtain market pricing for buyouts, buy-ins and longevity hedges
  • Cost analysis including accounting and funding position impact
  • Designing de-risking proposals and frameworks

Our approach to a pension buyout or de-risking transaction consists of the following three stages:

Stage 1 - Review options

Buyouts and buy-ins are relatively straightforward. But scratch beneath the surface and there are different regulatory regimes and a range of contract options and preparatory steps. These take into account elements such as:

  • Review and assess potential opportunities
  • Review and assess the regulatory landscape
  • List the insurance providers
  • Analyse and prepare transaction steps

Stage 2 - Practical steps to prepare for a transaction

Careful preparation pays dividends. It helps obtain better provider engagement, keener pricing and the ability to move quickly when needed. Here are five practical steps to take in advance of any transaction:

  • Create a trigger based approach, agreeing pre-determined points when deals look attractive
  • Review pensions data
  • Review investments. Are they liquid? Do they match the buyout pricing position?
  • Review insurance company strengths and weaknesses
  • Monitor prices

Stage 3 - Execution

Make sure you work with trusted service providers who have relevant experience and can help you through the stages of implementing the chosen solution and closing a transaction.

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