Faced with volatile equity markets and rising Pension Benefit Guaranty Corporation (PBGC) premiums and other administrative costs, many plan sponsors are looking to reduce their pension liabilities.
Do you know your options when it comes to pension de-risking?
The volatility and unpredictability of pension plan liabilities are a concern for many organizations. Once a cornerstone of many employer benefit packages, mounting administrative costs and rising life expectancies are making defined benefit (DB) plans increasingly challenging to maintain.
Terminating a frozen defined benefit DB plan or embarking on de-risking strategies isn’t easy and important considerations include timing and the plan’s funded status. Do you have enough cash on hand to cover the plan termination liabilities, or will you need to make a significant cash contribution? If a plan termination is not feasible, should you consider a lump sum window or a group annuity purchase?
As you consider your options, it’s important to evaluate which strategy makes most sense. With more than 100 years of experience helping organizations manage their DB pension plans, we know what works. Our actuaries, investment consultants, and pension risk team can provide a true one-stop shop to help you understand, measure, and take action on pension risk.
Our annuity placement team can manage all aspects of the transaction for you. We’ve been placing single premium group annuity contracts with top insurers for over 30 years, and we know how to structure these transactions to help sponsors fulfill fiduciary requirements and obtain the best possible premium bids from insurers.
Incorporating a lump sum payment window into your DB plan provides opportunities for plan sponsors to reduce risk, cut costs and give participants the flexibility needed to manage their own money. Our administration, risk management, and communication experts will support you in all phases of these projects.
With a clear focus on the end goal of terminating your DB plan, our actuaries, project managers, and compliance experts will guide you through each step, helping you through the process, lowering your ongoing costs, and reducing your exposure to risk. In the end, a well-thought-out strategy will lead to a smooth plan termination with no surprises.
Good communication is critical when making changes to your pension plan. We’ll help you develop an integrated communications strategy to ensure consistency and clarity. We’ll also create general and personalized materials for active and former employees.
Our compliance team is integral to our pension de-risking project teams, providing practical guidance on questions, governance matters, and other compliance issues that surface during group annuity purchase transactions, lump sum windows, and plan termination projects.