Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Buy-out definition

What does Buy-out mean? In pensions practice, a buy-out is where the trustees of an occupational pension scheme secure members’ promised benefits by purchasing individual annuity policies from an authorised life insurer, in the name of each member or other beneficiary. The insurer then becomes responsible for paying the benefits, and the scheme’s (and employer’s) liabilities to those individuals are discharged. Buy-out is a descriptive term rather than one defined in legislation, but the discharge of trustee liabilities, the order of priority on winding up and member protection requirements are set by pensions legislation and regulatory guidance. Usage and effect are broadly consistent...

Defined benefit pension de-risking—buy-ins and buy-outs: trustee powers, member consent, PPF/FSCS, GMP equalisation and Insurance Act 2015 duties

Published by a LexisNexis Pensions expert

Practice notes

THIS PRACTICE NOTE APPLIES ONLY TO Defined benefit OCCUPATIONAL PENSION SCHEMES

Recent years have seen more defined benefit occupational pension schemes fall into deficit, and sponsoring employers and trustees have shown heightened interest in ways to manage, and preferably reduce, the financial risks and investment swings linked to these arrangements—a process typically termed ‘de-risking’. A range of de-risking approaches exists, and further options continue to be developed. These methods are directed at managing exposure to financial risk and investment volatility tied to such schemes. Among them are incentive exercises, including enhanced transfer value exercises and pension increase exchange exercises, which are treated as part of the de-risking toolkit—an arsenal available to employers and trustees of defined benefit schemes (for more information on incentive exercises, see Practice Note: Pension scheme incentive exercises). Increasingly, however, de-risking strategies are turning to insurance solutions, with pension Buy-outs and pension Buy-ins being the most prevalent choices. Before proceeding with a buy-in or buy-out, the Pensions Regulator advises trustees to obtain specialist advice and, where appropriate, to consider appointing an accredited professional trustee or a risk transfer specialist...

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Wyn Derbyshire

gunnercooke LLP

Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also...

Web page updated on 21/05/2026

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