Capital Backed Investments for Pension Schemes – a summary of key benefits for schemes and employers

We have seen a great deal of interest arising from the James Neill Capital Backed Project on which we advised. 

Following this we have attached a helpful summary of key features and our background in this area.

Capital backed options capability statement - Burges Salmon

We would always be delighted to discuss, including at our stand at the Pensions UK Conference in Liverpool.

What are capital backed options?

Capital backed journey plans are designed to give schemes access to an additional external capital buffer as part of their journey planning, helping to reduce investment volatility and improve the likelihood of reaching long-term funding targets.
The capital backed journey plan considered in this note relates to the transaction we advised on for the James Neill Pension Plan with Portunes Pension Capital.
In summary, a capital backed investment plan (CBIP) involves the following aspects:
•A scheme enters into a contractual agreement with a third-party investor providing a capital buffer to assist with securing member benefits for a fixed period.

• Nearly all of the assets are transferred to the structure. In return, the structure provides a target rate of return (e.g. gilts
plus 1.5%) with the excess afterwards paid to the capital provider.

•Where the investment strategy does not meet the expected return, the capital buffer would be paid towards the shortfall.

• The existing trustees continue as trustees of the scheme. The members continue to receive their benefits from the same scheme.

• The arrangement runs for a fixed period of time (e.g. seven years).

• The sponsor retains responsibility for residual funding of the scheme.

In summary, the CBIP is an investment decision which provides greater security for the trustees and members. The Investor receives a return on capital at the end of the fixed term, after the Trustee has received its target return (whilst agreeing that the excess is paid to the capital provider).

Burges Salmon is a leading adviser on capital backed options and related structures

Burges Salmon is well-placed to advise on capital backed journey plans, capital backed investment plans and other alternatives to buy-out.

In June 2026, the Burges Salmon team, led by partner Clive Pugh, advised the Trustee and James Neill Holdings Limited on the successful completion of a landmark capital-backed investment transaction with Portunes Pension Capital.

This follows the pioneering Nova capital backed journey plan completed in 2020 and represents a further pillar in the funding solutions which may be offered to DB schemes.
Buy-in and buy-out have traditionally been the primary long-term options for trustees and sponsors seeking to reduce risk. However, capital backed investment options show how the market is developing a wider range of alternatives which help schemes progress their long-term objectives without moving to an insurer. Alternatives to buy-out, such as CBIPs, can play an important role in helping schemes manage funding risk while maintaining investment flexibility. These structures are therefore emerging as alternatives offering different risk-return profiles to achieve long-term funding objectives for pension schemes.

Some benefits of capital backed options

The benefits of capital backed options include:

• Offering reduced dependence on employer covenant and additional security through third-party capital support.

• Preserving flexibility for schemes, either looking for a bridge to buy-out or considering run-on.

• Such transactions can be specifically tailored to support a scheme’s funding and investment objectives and, at the same time, they can preserve a scheme’s existing investment strategy.

• By preserving a scheme’s existing investment portfolio (alongside a capital buffer), they can avoid the need for a portfolio-wide sale of assets.

• They can improve member outcomes and provide a structured period over which funding may improve before benefits are secured with an insurer or the scheme runs-on.

• Offering an alternative to traditional journey planning