Accounting for pension buy-in arrangements

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March 2016


A pension buy-in arrangement is designed to generate payments that equal all future designated plan obligations for covered participants. Unlike a buy-out arrangement, in a buy-in, the plan trust holds the insurance contract and the employer remains ultimately liable for paying the benefits.

Buy-in contracts are becoming more popular to fund pension obligations. The accounting for buy-in contracts is different than the accounting for buy-out contracts. This Insight discusses the advantages, disadvantages, and accounting implications of buy-in arrangements.

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Kelley McLaughlin

US Tax Marketing Leader, PwC US

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