CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is a pension buyout?

Pension buyout

A pension buyout is a type of financial transfer allowing companies to completely wind up their pension schemes by paying a fixed amount to free themselves of any liabilities associated with the funds. The funds are transferred to the hands of an insurance group.

Where have you heard about a pension buyout?

Since 2006 onwards, pension buyouts have become increasingly popular in the United States and United Kingdom. One of the largest recent pension buyouts was in 2016, when Legal & General completed a £1.1 billion pension buyout for the Vickers Group Pension Group.

What you need to know about a pension buyout.

Pension buyouts are becoming increasingly popular for scheme members because final salary schemes are proving more costly for companies to fund due to many schemes being in deficit. In addition, people are living longer and there has been a decline in returns from low-risk assets.

Once a pension buyout has been complete, the insurance company becomes responsible and pays out the pension, protecting scheme members from the risk of benefits reducing for whatever reason. Pension buyouts work because insurance companies have much higher capital requirements than most employers.

Find out more about a pension buyout.

Understand the basics of pension buyouts by reading our definitions of pension and pension fund.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading