The ins and outs of bulk annuities

(Apr 14, 2013)

The UK has a well developed and highly competitive market in bulk annuities. These typically arise when a defined-benefit pension scheme wants to insure its liabilities. The most obvious scenario is when a pension scheme is being wound up and benefits have to be secured with an insurance company.  Since the pension scheme is ceasing to exist, individual policies are purchased for each member. The now-former pension-scheme member owns his or her own annuity policy, which cannot be surrendered or transferred once annuity payments start.  All risks such as longevity and investment are transferred to the insurer in a transaction known as a buy-out.

However, there is another option called a buy-in - the scheme…

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Tags: bulk annuities, buy-ins, buy-outs, survival models

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