DB pension member options – Part four: partial buy-ins: still a good idea?

A buy-in is an asset held by a pension scheme that secures a portion of the scheme’s liabilities with an insurer and reduces associated risks.

A partial buy-in, on the other hand, covers only a fraction of the scheme’s liabilities, providing protection against risks such as interest rates and inflation. It mitigates longevity and demographic risks while enabling schemes to take advantage of favourable insurer pricing, resulting in long-term cost savings. Although the ultimate goal is a full buy-out, partial buy-ins are crucial milestones. Given recent events and market conditions, it is crucial to revaluate the strategic rationale for partial buy-ins, considering factors like returns, risk, liquidity, and flexibility.

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