Pension buy-ins and buy-outs
From the early steps of designing your scheme’s strategic journey plan, through transaction preparation to the final negotiations for a buy-in, longevity swap or buy-out and wind-up, with LCP you will have the confidence of working with highly experienced leading pension scheme buy-in and buy-out experts.
How LCP helps pension schemes on their buy-in / buy-out journey
Managing pension scheme risks is a complex task, but LCP offers specialist advice to help schemes achieve stability through tailored de-risking strategies, including buy-ins and buy-outs, superfunds, and longevity swaps.
Our track record
- Experienced advisers: LCP has been a leading adviser on buy-ins and buy-outs for transactions over £500 million and £100 million since 2014.
- Broad market experience: Since 2014, we’ve guided over 270 transactions, amounting to more than £70 billion.
- Support for smaller schemes: Our expertise extends to over 130 transactions under £100 million, ensuring that schemes of all sizes receive the right support.
- Recognised by the industry: LCP’s work has been acknowledged through 12 industry awards since 2011.
- Innovative approach: In 2014 LCP developed the umbrella contracts concept, allowing schemes to execute top-up buy-ins and longevity swaps more quickly, capturing market opportunities as they arise.
- Significant achievements: We’ve supported some of the largest schemes in the UK in reaching full insurance, including the RSA pension scheme (£6.5 billion) and the British Pension Scheme (£7.5 billion). Our role in these transactions reflects our ability to manage complex challenges effectively.
LCP’s buy-in and buy-out market-leading credentials since the start of 2023
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27%LCP market share of 27% by volume to end-June 2024
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9Lead transaction adviser on 9 buy-ins over £1bn
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£1.5 bnLCP has led 29 smaller streamlined buy-ins/outs totalling over £1.5bn
LCP’s market experience, commitment, problem solving, and ‘can-do’ mentality has been fantastic and critical to enabling us to meet our commercial objectives and de-risk our balance sheet years ahead of previous expectations.
Simon de Baat Head of Group Capital at Intact (parent company to RSA), following their record £6.5bn full buy-in in February 2023
Pension risk transfer report
Our 2024 report looks at the opportunities for sponsors and trustees to transfer the risks associated with defined benefit pension schemes. Find out whether insurance – through a buy-in or buy-out is the right answer for your scheme, how can pension schemes make the most of changing market dynamics and whether insurer pricing continue to remain attractive.
Our pension scheme buy-in / buy-out experts
Related services
Endgame strategy and journey planning
Learn morePensions risk transfer
Learn morePost-transaction and wind-up support
Learn more
Selected 2024 LCP-led transactions
Your questions answered
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A pension buy-in is an investment where a pension scheme purchases an insurance policy to cover the benefits payable to some or all of its members. This means that the insurer takes on the responsibility for paying the pensions of those members to the scheme, effectively transferring the risk from the pension scheme to the insurer. The scheme retains the legal responsibility for paying the pensions, but the insurer is responsible for funding the scheme so the payments can be made. The scheme transfers assets to the insurer to the meet the buy-in price.
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A pension buy-out involves a pension scheme assigning an insurance policy into the names of the members or other beneficiaries of the scheme. A buy-in is a necessary first step before a buy-out. The buy-out transfers legal responsibility for paying the members from the pension scheme to the insurer. Pensions are then paid directly to members by the insurer rather than by the scheme, and the buy-in ceases to be an asset of the scheme. This process is used to transfer all or part of the liabilities of a scheme to an insurer and is often associated with the winding up of the scheme. It is not normally necessary to make any additional payment to the insurer to move to buy-out.
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A longevity swap is a financial arrangement used by pension schemes to manage the risk associated with members living longer than expected. Essentially, it involves the pension scheme making regular fixed payments to an insurer or reinsurer, who in return agrees to cover the actual pension payments to the scheme's members. This way, the insurer takes on the longevity risk, meaning if members live longer than anticipated, the insurer bears the cost.
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A superfund is a type of pension scheme designed to consolidate multiple defined benefit (DB) pension schemes into a single, larger fund. This approach can be used when a pension scheme has no realistic prospect of securing a full buy-out with an insurer in the foreseeable future.
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