We has assisted a client with implementing a bulk annuity buy-in for its defined benefit pension plans. Annuity buy-ins are still relatively rare in the United States; this would be one of the first.
Under a buy-in, the plan buys an insurance policy to secure all or part of future benefits due to be paid to participants. The pension plans’ trust holds the bulk annuity policy as an asset and retains the ultimate responsibility for making the monthly benefit payments to participants and beneficiaries, while the insurer takes on the financial and demographic risks. The insurer reimburses the plans for the amount of benefits paid out each month.
We handled all contract reviews, revisions, and negotiations with the three insurance companies bidding on this purchase. All three commitment agreements and contracts had to be fully negotiated by the selection date. We then worked with the selected carrier to properly document the various benefit formulas in the annuity contract.
Under a buy-in, the plan buys an insurance policy to secure all or part of future benefits due to be paid to participants. The pension plans’ trust holds the bulk annuity policy as an asset and retains the ultimate responsibility for making the monthly benefit payments to participants and beneficiaries, while the insurer takes on the financial and demographic risks. The insurer reimburses the plans for the amount of benefits paid out each month.
We handled all contract reviews, revisions, and negotiations with the three insurance companies bidding on this purchase. All three commitment agreements and contracts had to be fully negotiated by the selection date. We then worked with the selected carrier to properly document the various benefit formulas in the annuity contract.
