Risk settlement: The inefficiency of buy-ins?

Pensioner buy-in transactions represent an investment in an insurance policy which provides benefit payments for a defined subset of a pension scheme’s membership.

Such transactions are often viewed as an incremental step towards a full scheme buy-out. Whilst pricing has certainly improved in recent years, a pensioner buy-in can represent an inefficient use of capital for many schemes. In fact, entering a buy-in policy may bring with it a series of unintended consequences which could threaten the attainment of a scheme’s ultimate goals.

The inefficiency of buy-ins?
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