Bulk annuities (or group annuity)
\bʌlk\ \əˈnuɪtiz\
An insurance offering popular with pension plans where a portfolio of annuity contracts is purchased to cover a group of participants of the plan.
Provided the benefits are matched by the contract, it should provide a perfect hedge to the longevity risk, investment risk and inflation risk of the plan.
If the purchase of bulk annuities results in passing all the governance and control of the assets to the insurance company, the contract is known as a buy-out. In the UK a buy-out must be in respect of all participants of a pension plan. In the US and Canada, it is possible to buy-out a subsection of the plan.
If the purchase of bulk annuities results in the insurance contracts remaining as plan assets, the contract is known as a buy-in.
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