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Buy-Out and Buy-In

After a busy 2008, 2009 was a quieter year for transfers of pension liabilities to insurance companies due largely to the poor performance of the equity market and greater uncertainty about the financial security of insurers.  However, business improved in the last quarter of 2009 and the first two quarters of 2010 as the equity market recovered. 

Insurers now have a good awareness of when they will be competitive and they have also expanded their range of solutions.  As a result, it is now less likely that a scheme will be able to obtain a wide variety of quotes but most insurers will be able to tailor their products to a scheme’s requirements.  These tailored products are mainly being aimed at schemes not yet in a position to buy-out the liabilities in full but who want to put in a plan to systematically reduce risk and secure the liabilities over a specific period. When considering a full or partial buy-out of a scheme's liabilities, it is important that all options are considered so that specific objectives can be achieved and any risks retained by the scheme are understood and managed.

Once the objectives have been decided, negotiation with insurers is important to obtain the best deal.  Areas that schemes could consider include the timing of premium payments, the transfer of investments and the mechanism for ensuring that a deal can be concluded quickly. This final point is particularly important as changes in market conditions can mean that deals become affordable but only for a short period of time.  We have considerable experience in this field and are are ideally placed to format an action plan for a scheme and to negotiate terms with the insurers.

Smaller Schemes Buy-Out Service

Historically smaller schemes have struggled to obtain competitive quotes in a timely fashion, with insurers tending to give larger schemes priority.

To address this challenge, Barnett Waddingham has formed a strategic alliance with MetLife Assurance Limited to offer an arrangement specifically designed for smaller schemes. The arrangement has been designed to be most appropriate for smaller schemes looking to secure liabilities as low as £5 million. However, any scheme looking to secure liabilities with an insurance company might benefit from some features of this arrangement which is available to any scheme that has appointed Barnett Waddingham to advise on the pension risk transfer process.

Barnett Waddingham and MetLife Assurance have worked very closely to streamline what can sometimes be a protracted buy-out process, depending on the size and complexity of the scheme. This new arrangement aims to contain costs and speed up the key aspects of the process for smaller schemes.  For further details please click here.

For more details on our services in this area please click here.

Related Documents
Assessing Insurer Solvency for a Buy-In (173.58 KB, .pdf)

Corporate Consulting - Bulk Annuity Policy (216.93 KB, .pdf)

Mortality Risk for Small Pension Schemes (277.70 KB, .pdf)

Reducing Pensions Risk - Ready to Act? (407.97 KB, .pdf)