What we do: buy-in and buy-out 

An innovative approach to buy-in and buy-out solutions

Our standard and medically priced de-risking solutions deliver choice and potential value for trustees and sponsors. They protect trustees from increasing longevity of the members of their scheme, investment volatility and inflation by providing a guaranteed income to pay the pension benefits selected for the members covered.

Medical underwriting that can deliver pricing advantage

In addition to standard priced solutions (without medical underwriting), we have innovated medically underwritten propositions that deliver pricing advantage.

DB Choice lets you compare our medically priced de-risking solution with the market, so you can see the value that medical underwriting will deliver before you transact. It delivers guaranteed standard and medical pricing at the point of quotation. The medically underwritten DB Choice premium (MUBA +) includes a discount to our standard price based on the average reduction in premium we expect to achieve after collecting medical data. Where the MUBA + price is selected, we collect health and lifestyle data from selected members after the transaction. However, the price paid at the point of transaction is guaranteed and does not change, whatever the result of the health and lifestyle data collected. Changes to quotation data, such as corrections to marital status or dates of birth could impact the price paid.

In addition to DB Choice, we also offer other post-transaction medically underwritten bulk annuities and a pre-transaction medical underwriting bulk annuity. This choice lets us recommend a solution that’s suited to the membership profile and liability and also lets trustees choose the level of pricing certainty and reward they want to take-on.

Please contact a member of the business development team to discuss your options.

What is a buy-in?

In exchange for a single premium payment from the trustees, we guarantee to pay an income stream to the scheme bank account that matches the benefits specified for the members selected by the trustees. This is usually paid monthly.

The trustees remain responsible for making pension payments to members. The buy-in policy is held as an asset of the scheme and enables the trustees to meet future benefit payments to the members covered.

Trustees work with their advisers to specify the benefits to be covered, the members to be insured and a target price to be achieved. The benefits specified normally match scheme rules for the members covered, in which case payments from us will be an exact match to the benefits due. But it’s possible for trustees to specify a subset of scheme rules (or simplified benefits) to be covered.

The level of benefits covered and number of members to be included will influence the complexity, cost and time required to fully implement the policy.

It has become common for trustees to conduct a series of buy-ins, de-risking the liabilities for different cohorts of members as they retire. This is usually part of a de-risking strategy which ends in the winding up of the scheme following buy-out.

What is a buy-out?

A buy-out is the final stage of the de-risking journey when the trustees pass all legal responsibility for administration, payments and communication for the members selected to us. It’s normal for all members to be covered so trustees can wind-up the scheme, but it’s possible to arrange a buy-out for a sub-set of the membership, in which case all groups of members must continue to be fairly treated.

All benefits payable under the scheme rules must be covered or the scheme rules altered to assist the buy-out. This means that normally the first stage of a buy-out is for us to issue a buy-in policy for any benefits and/or members not already covered by existing buy-in policies.

Next, we issue individual annuity policies to the pensioners and deferred pensioners covered, and they become our policyholders. We guarantee to pay an income stream directly to each member selected that is an exact match to the full pension benefits they’re entitled to receive. This is known as a buy-out, and if all members of the scheme are covered the trustees can then wind-up the scheme.

Buy-in and buy-out process

What are the key stages of a buy-in?

  1. Scheme trustees select a group of members to insure
  2. Scheme trustees make a single premium payment to Just in exchange for the insurance policy
  3. Just issues a buy-in policy that becomes an asset of the scheme
  4. Just invests the premium in a range of assets including bonds, infrastructure and life time mortgages
  5. Just receives returns on these investments
  6. Just pays a monthly lump sum to trustees equal to the benefits covered for the individual members insured
  7. Scheme trustees continue to pay pensioners
  8. Sponsoring employer continues to fund the scheme for any uninsured benefits

What are the key stages of a buy-out?

  1. Scheme trustees make a single premium payment to Just
  2. All responsibility for the scheme and members transfers to Just
  3. Just issues individual annuity policies to members and they become policyholders of Just Retirement Limited
  4. Just pays pensioners directly and issues any communications required to them and their dependants