More than half (53%) of the U.K.’s large defined benefit plans are planning for an insurer buy-in or buyout within the next three years, according to research by insurance and asset management firm Legal & General.

In 2023, around £50 billion of U.K. retirement income was secured with insurance companies through pension buy-ins and buyouts.

When it came to investment strategy, three quarters of respondents affirmed that they were decreasing allocations to illiquid assets. Insurers have previously expressed caution in engaging in buy-in or buyout with pension schemes with large illiquid holdings.

L&G’s survey of 40 pension plans with an average size of £9 billion was undertaken in collaboration with the Centre of Economics and Business Research.

Of the respondents to the survey, 38% were aiming for full buyout, the most common long-term objective identified in the survey, and a further 15% of respondents were planning to implement a buy-in as part of their derisking objectives.

A previous L&G study from 2015 saw only 11% of defined benefit respondents planning for an insurance buy-in or buyout.

Andrew Kail, chief executive of Legal & General Retirement Institutional, said: “This research provides a valuable window into a moment of great change and opportunity for the largest pension schemes in the U.K. as they look to the future of providing security in retirement for their members.”

Furthermore, 76% of the schemes surveyed stated that they are monitoring their buyout funding level on a quarterly basis.

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