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LEGAL DEVELOPMENTS IN LDI PENSION PLAN INVESTMENT STRATEGIES AND BUYING OUT DB PLAN BENEFITS
The panel will discuss the legal issues that arise out of liability driven investment strategies and buy-in and buy-out annuity and longevity swap transactions in their respective jurisdictions, including:
- Some key considerations in implementing a pension plan LDI investment strategy.
- Whether longevity swaps are regulated as insurance or can be regulated as a capital markets transaction.
- Some practical issues in managing the legal aspects of a buy-in or buy-out transaction.
- Managing credit risk on the insurance company on buy-in annuity policies and what types of collateral arrangements can be put in place to protect against insurance company insolvency.
- Issues raised by partial buyouts and fairness of treatment between the members being bought out and the members being retained in the pension plan.
- Issues over obtaining a good discharge for the pension plan and the plan sponsor, in relation to buy out policies.
The following are some recent examples of transactions in this area which you may not know about:
- Canada: C$ 1.8 billion buy out of General Motors Canada pension plan pre June 2020 retirees liabilities. Read more here.
- UK: pension buy-outs and buy-ins and longevity swaps forecast to exceed £55 billion in the UK in 2021. Read more here.
- the US: are buy-outs of DB pension plan obligations cheaper than paying them from the plan. Read more here.
MODERATOR: Susan Nickerson, Torys LLP, Canada
PANELISTS: Hugh Kerr, Canada, Charles Magoffin, Freshfields Bruckhaus Deringer, UK, Izzy Goldowitz, The Wagner Law Group, USA