Insuring Scheme Benefits - An Attractive Option

Due to buyout costs becoming more agreeable and recent product developments, securing liabilities with insurers is now a worthy option for schemes.

The most straightforward method of discharging scheme liabilities is to secure, or buyout, benefits, for both deferred and pensioner members, with an insurance company. Indeed, on wind-up of a defined benefit scheme, this is the ultimate means by which the scheme can guarantee to meets its liabilities.

In general, however, the cost of such a buyout is much higher than the normal assessment of a live scheme's liabilities, referred to as the technical provisions under valuation regulations. As such, the cost is generally viewed as prohibitive.