Final Salary / Defined Benefit pension schemes pay pensioners a set amount for the remainder of their lives which results in a heavy financial burden on the employers that provide them. These employers may find out during the actuarial review process that their future liabilities exceed the value of the fund and as such will likely be required by the pensions regulator to provide security for the deficit amount. Such security can be provided as a pension bond which would be issued by a surety.

Final Salary / Defined Benefit pension schemes pay pensioners a set amount for the remainder of their lives which results in a heavy financial burden on the employers that provide them. These employers may find out during the actuarial review process that their future liabilities exceed the value of the fund and as such will likely be required by the pensions regulator to provide security for the deficit amount. Such security can be provided as a pension bond which would be issued by a surety.

Who are they for? Employers with final salary pension schemes which are in deficit.

When making a substantial purchase for what could be a company or a piece of land, there may be a requirement to pay a fixed sum upon legal completion with the remaining consideration to be deferred over a set period. In cases like this, the seller may require a form of security which ensures that they will receive their deferred monies in the event that the purchaser becomes insolvent or defaults on future instalments. Such security can be provided as a deferred consideration bond (also known as deferred payment bond) which would be issued by a Surety. By deferring consideration beyond the legal completion date, the buyers liquidity/cashflow can be improved.

Who are they for? Companies making large acquisitions and commercial and residential property developers

Companies may sometimes volunteer to carry a large insurance deductible (excess) on compulsory policies such as Employers Liability in exchange for a reduction in their premium. As employers liability and some motor policies require settlement in the event of a claim without deduction of any excess, the insurer may require a form of security to protect them against the risk of non-payment of excess in the event of insolvency. Such security traditionally was secured via a letter of credit but can now be replaced by an insurance deductible guarantee which is issued by a surety and in turn frees up the corporate’s working capital whilst also providing a potential cost saving.

Who are they for? Companies with substantial compulsory insurance policies.