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A buyout or buy-in transfers some or all of the inflation, longevity and investment risk of a pension scheme to an insurance company.

The resulting insurance policy delivers payments to cover liabilities to the relevant pensioners, with the policy being a scheme asset on a buy-in or the liabilities being transferred to the insurer on a buyout. The transaction therefore reduces scheme risk by ensuring an income stream without the investment, longevity or inflation risk inherent with investing in non-matching asset classes.

How can we help?

We regularly advise trustees, employers and providers on a range of full and partial buy-ins and buyouts, so we understand the issues from all parties’ perspectives and can deliver a seamless service covering all aspects of the deal, from structuring to completion.

Over the last 20 years, our deals have included:

  • the first buy-in to break the £1bn barrier, a significant proof of concept in the derisking market
  • a series of 19 buy-in deals since 2014 derisking a total of £14bn in liabilities for the ICI Pension Fund with three different insurers, using an innovative ‘umbrella’ structure which allows the trustee to transact in a matter of days rather than weeks when the conditions are right
  • multiple successive ‘largest ever’ deals and transactions with innovative features – and the ability to roll out our legal technology developed on those deals to smaller transactions, often working to a compressed timetable for optimum pricing.

Deals like these often need a large team to mobilise quickly across several specialist areas, having put in the preparation and strategic planning ahead of time so that the trustee is in the best possible situation to transact when market conditions are favourable. The ability to do this is at the core of how our Pension Risk Group operates. We have the technical strength and capacity to carry out these large-scale complex projects and we advise on the whole range of issues involved, from technical pensions and data issues to new structures that mitigate commercial risk and widen market access. This is highly complex work that needs a mix of investment funds expertise, technical and innovative pensions advice and the commercial nous to get things done for clients who want to get to market in a highly regulated and political situation.

Pension Risk Group