For some companies, establishing a pensions captive may be a clear preference to running-on a defined benefit (DB) scheme for the long-term or transferring economic value to an external insurance company in a traditional buyout.
A pensions captive transaction allows the company to retain economic value from DB assets and surplus (along with associated risks), reduce governance and running expenses, increase operational control and leverage in-house capabilities. This can also allow the company and their trustees to secure DB members' benefits with an external insurance company, just like a traditional buyout.
In January 2024, Aon was the sole lead adviser to a ground-breaking pensions captive deal – the first ever to use surety bonds to make the deal self-financing. Our large multi-national client has established a global pensions captive, starting with £1 billion of DB liabilities across two UK DB schemes.
During this discussion, Aon's specialists cover:
- The key features of a pensions captive
- Insights from the deal completed in January 2024
- How companies can consider, agree and execute a DB endgame strategy aligned to their objectives and philosophy
