Unlocking Value in Pension Plan Terminations
Plan sponsors need a new blueprint for risk reduction
As the pension plan termination market has matured, a blueprint has emerged—one that places the selection of an insurer toward the end of what is a lengthy process. To follow this blueprint, however, can put organizations at risk, leaving them open to financial and insurer capacity uncertainties.
On the other hand, involving an insurer early in the plan termination process can help sponsors greatly reduce risk through a buy-in. A buy-in guarantees future benefit payments to a select group of participants, transferring market and longevity risk to the insurer at a price consistent with buy-out pricing. With three new potential blueprints for plan termination, plan sponsors can work with an insurer to find the best fit for their needs.
This paper covers mitigating key risks, the benefits of a buy-in, and how an insurer can help unlock value during the plan termination process.