Pension risk transfer (PRT) strategies, particularly buy-ins and buy-outs, have become a cornerstone for organizations looking to reduce pension-related risk and expense. Over the past several years, transaction volume has exceeded $45 billion annually, with recent activity surging in Q4 to $28 billion, driven by the largest quarter of buy-ins in US history.1

On paper, the story is clear. Strong funding levels, favorable economic conditions, and a competitive insurance market have created the ideal environment for action.

But there is a more important question beneath the surface. Are organizations choosing the best strategy, or simply the most familiar one?

Although traditional insurance is common, simplicity should not be confused with efficiency.

The Hidden Trade-Off in Commercial Transactions

Commercial insurance solutions are built to generate profit. That reality is embedded in every transaction.

Pricing typically includes:

  • Risk margins
  • Capital charges
  • Administrative costs
  • Insurer profit

These are not minor line items. They are fundamental components of the structure. So while a buy-out may deliver a clean accounting outcome, it often comes at a premium that exceeds the true economic value of the obligation. In other words, organizations may be reducing risk, but they are also giving away value.

A Smarter Alternative: Captive Buy-Ins and Buy-Outs

A growing number of plan sponsors are rethinking the default by leveraging captive insurance companies to execute buy-ins and buy-outs. This approach shifts the equation. Instead of transferring both risk and economics to a third party, organizations can retain greater control while still achieving meaningful risk transfer.

Why Captives Change the Equation

Who Should Consider this Option?

The transaction can be structured in a myriad of ways that allows ultimate flexibility to plan sponsors while maximizing savings and financial stability. Frozen and accruing plans alike can take advantage of captive strategies. The real issue is not feasibility. It is that most organizations have only been shown one path.

Captive strategies introduce a more deliberate approach. One that reduces cost, preserves control, and aligns financial outcomes more closely with long-term objectives. For organizations willing to challenge convention, the opportunity is significant.

Start the Conversation

For organizations evaluating their PRT strategy, the path forward does not have to be limited to traditional options. The most effective approach starts with understanding the full range of what is possible and aligning that strategy with your financial and operational goals.

Spring Consulting Group has been at the forefront of designing and implementing captive-based PRT solutions, helping organizations move beyond one-size-fits-all transactions toward more efficient, controlled outcomes. If you are exploring your next step, now is the time to ask a different set of questions and consider whether your current approach is truly optimal. Connect with your Spring Consulting Group contact to continue the conversation.

1LIMRA: U.S. Single Premium Pension Risk Transfer Product Sales Jump 132% in the Fourth Quarter of 2025 https://www.limra.com/en/newsroom/news-releases/2026/limra-u.s.-single-premium-pension-risk-transfer-product-sales-jump-132-in-the-fourth-quarter-of-2025