What is a pension buyout?

A pension buyout (alternatively buy-out) is a type of financial transfer whereby a pension fund sponsor (such as a large company) pays a fixed amount in order to free itself of any liabilities (and assets) relating to that fund. The other party, usually an insurer, receives the payment but takes on responsibility for meeting those liabilities.

What is a buyout with an insurance company?

A buyout with an insurance company is usually seen as the gold standard objective for companies and the trustees who run DB pension schemes on behalf of the members. Why?

Should you accept a buyout?

Accept the buyout, and you'll have a large chunk of money to invest toward retirement. But you can no longer expect to get that monthly check the company had promised when you retire. Be a smarter, better informed investor.

What is a section 32 buyout?

The other party, usually an insurer, receives the payment but takes on responsibility for meeting those liabilities. This type of buyout, known as a Section 32 Buyout, was introduced in the UK in the early 1980’s.