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Pension plan insurance and de-risking

Following major buy-outs across the globe in recent years, there’s no doubt that pension insurance and de-risking has become a major focus for corporate plan sponsors. While the pace of growth in this sector will depend on factors such as rate levels, equity returns, funding patterns and regulatory change, it is becoming increasingly common for sponsors and plan trustees to insure their pension liabilities.

It is vital for all parties that these transactions are properly documented, with risks for plan sponsors, trustees and insurers appropriately addressed via negotiation and drafting.

Experienced pension plan insurance and de-risking lawyers

Without legal advice delivered by pensions and insurance lawyers who are experienced in the field, plan sponsors, trustees, fiduciaries and insurers are exposing themselves to the risk that a contract does not offer them appropriate protection, or is inconsistent with regulatory requirements. In addition, if lawyers are involved who are unfamiliar with the market and/or unable to work to commercially driven timescales, there is a risk of targets being missed, with the result that transactions need to be re-priced or adviser fees incurred that are higher than necessary.

We understand that you need legal advisers who understand the market and can deliver high quality work within tight timescales.

Our pensions insurance and de-risking team advises on all aspects of buy-in and buy-out insurance policies, including:

  • contract terms – we have first-hand knowledge of the standard terms of the major insurers
  • drafting and review of benefit specifications
  • contract wording for ‘all risks’ cover, where the insurer takes on the risk that the benefits are not as described in the benefit specification
  • quotations and other contractual documents

Our role when acting for you is to guide you safely through the process of negotiating and executing a buy-in/buy-out agreement, alerting you to the legal risks, and advising on how those risks can be mitigated. Our pensions and insurance lawyers act as a team with benefit consultants, pensions managers and trustees to deliver the best outcome for you.

When acting for insurers our role is to ensure that policy wording contains appropriate contractual protections, and, where necessary for all risks cover, to conduct due diligence on plan documents – to verify consistency with the benefits described. We are also sensitive to the commercial realities, and so help insurers to identify both points where protection is needed and areas of potential compromise.

An experienced pension plan insurance and de-risking legal team

What makes us stand out is our strength and depth of experience in advising plan sponsors, trustees, fiduciaries and insurers on buy-in and buy-out contracts. We will ensure that you have the right lawyers with the right experience advising you, in a way that meets your needs and is focused on delivering your goals.

We can offer you can expect pensions law advice that:

  • is of the highest quality
  • is tailored to your needs and your style
  • is commercial and pragmatic
  • is focused on the key legal risks you face
  • facilitates smooth execution of the buy-out/buy-in transaction

Contact our pension plan insurance and de-risking team

If you would like any further information or need advice on pension plan insurance and de-risking, please contact our legal team.

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