UK Pension Buy-outs: why trustees must speak up to safeguard member outcomes

10 June 2025

Contact Kim Nash
Managing Director, ZEDRA Governance
[email protected]

As the UK pension landscape continues to evolve, trustees have a responsibility to take a more active role in shaping the future of member outcomes and sustainability throughout buy-out transactions.

A shifting landscape in pension scheme transactions

The UK has seen a marked increase in pension schemes completing pension buy-out transactions. These deals, which transfer pension liabilities from trustees to insurers, are reshaping the investment landscape and introducing new systemic risks. While a buy-out can offer security and finality for schemes, they also mark a critical transition point – one where trustees relinquish control over the assets and the stewardship principles they have long championed.

For years, trustees have embedded sustainability into their investment strategies, setting clear stewardship priorities and pushing for responsible asset management. However, at the point of risk transfer, that influence ends. Trustees must ensure the values and principles they upheld during their tenure continue to be reflected in the post-transaction environment.

Beyond price: A new set of priorities

Historically, the primary driver in selecting an insurer for a pension buy-out has been price. However, this is beginning to change. With many schemes now in stronger funding positions, the need for employer top-ups has diminished. This financial stability gives trustees the freedom to consider other critical factors – such as member experience, cultural alignment, and environmental, social, and governance (ESG) credentials.

This is the last opportunity for trustees to push for full transparency. They need to ask how members will be treated, what the experience will look like post-transaction, and how the insurer’s sustainability commitments are evidenced – not just promised.

The power of questions

Trustees must use their voice. By asking the right questions and demanding concrete data, trustees can influence insurer behaviour and drive positive change across the market. This includes probing insurers on how they manage ESG risks, how they report on sustainability metrics, and how they plan to maintain or improve member services.

The more trustees focus on these issues, the more insurers will be compelled to respond with substance. This, in turn, can elevate standards across the industry, ensuring that member outcomes and long-term sustainability are closely considered by insurers.

A call to action

Trustees are uniquely positioned to act as stewards of both financial and ethical responsibility. As they approach the final stages of their fiduciary journey in a buy-out, their influence – though time-limited – can be profound.

Trustees should:

Demand transparency: Insist on clear, data-backed evidence of how insurers will manage member outcomes and sustainability.
Move ESG up the priority list: Evaluate insurers not just on financial strength, but on their commitment to responsible investment and long-term impact.
Champion member experience: Ensure that the transition enhances, rather than diminishes, the quality of service and support members receive.
Use their leverage: Recognise that this is a critical moment to shape the future – both for scheme members and for the broader pensions ecosystem.

In conclusion

The rise in pension buy-outs presents both opportunities and risks. Trustees must not view the transaction as the end of their responsibility, but rather as a final, powerful moment to advocate for the values they have upheld throughout their stewardship. By holding insurers to account on sustainability and member outcomes, trustees can help ensure the legacy they leave behind is one of integrity, foresight, and care.

How ZEDRA can help

Our award-winning team acts as independent professional trustee to Defined Benefit (DB), Hybrid, and Defined Contribution (DC) pension schemes across the UK.

Widely experienced across multiple industries, we deliver a service that reflects your individual requirements and achieves good outcomes for scheme members and sponsors.

We understand that a collaborative working relationship between the trustees and the sponsor is key to success, and we constructively engage and challenge the scheme’s advisers to enhance decision making, budgeting, and time management.

To find out more, contact Kim Nash.

This content was originally uploaded to Pension Funds Online, and has been edited for our use.

Frequently Asked Questions

What is a pension buy-out?

A pension buy-out is a transaction that transfers pension liabilities from trustees to an insurer. It marks a critical transition point where trustees relinquish control over assets and their long-held stewardship responsibilities.

Why are trustees beginning to prioritise factors beyond price in pension buy-outs?

As schemes reach stronger funding positions and no longer rely as heavily on employer top-ups, trustees have more flexibility to look beyond just cost. This enables them to focus on other important considerations, including how members will be treated after the transaction, alignment with scheme values, and the insurer’s track record on ESG commitments.

What do trustees lose control of after a buy-out?

Trustees lose control over the assets and the stewardship principles they have embedded in their investment strategies, including sustainability and responsible asset management.

What kind of questions should trustees ask insurers?

Trustees should ask how members will be treated post-transaction, how sustainability commitments are evidenced, and how insurers manage ESG risks, report on sustainability, and maintain or improve member services.

How can trustees influence insurer behaviour?

By using their voice and asking the right questions, trustees can drive positive change across the market and push insurers to raise standards in areas such as sustainability and member outcomes.

What actions should trustees take before completing a buy-out?

Trustees should demand transparency, prioritise ESG factors, ensure member experience is maintained or enhanced, and use their leverage to influence outcomes while they still have control.

How does ZEDRA support trustees during a pension buy-out?

ZEDRA acts as an independent professional trustee to DB, Hybrid, and DC pension schemes across the UK, engaging collaboratively with sponsors and advisers to deliver good outcomes for members and enhance decision making.