Your path to heightened pension certainty may involve multiple phases, and will require careful planning. Your firm and its defined benefit pension plan are as unique as the ultimate de-risking journey you may take.

You may associate de-risking with times of market volatility, but you should know that pension risk transfer strategies designed and executed during periods of relative market stability can offer a prime opportunity to implement strategies to mitigate the risks of defined benefit debt obligations.

It’s time to re-think pension risk, and the time to transfer your plan’s risk is now.


  • Ultimately creates greater certainty of corporate cash flows.
  • Avoids potential funding surplus trap.
  • Takes advantage of rising funded status window of opportunity.
  • Timing—it can take many months to execute a pension risk transfer transaction depending on complexity, populations, type of transfer, portfolio allocation, and other factors.
  • Taps early mover advantages: access to finite insurer capital, operational capacity, and current pricing.



Funded status is chief among the many factors to consider when determining how and when to de-risk.

In a rising interest rate environment, a plan's funded status can be volatile and windows of opportunity to act can be fleeting. During the first six months of 2013, U.S. corporate DB plan funded status increased from 76 percent to 88 percent. Over the course of 2013, U.S. corporate Defined Benefit plan funded status increased from 76 percent to 88.3 percent. (Milliman 100 Monthly Pension Funding Index)

Your pension’s funded status may be closer to 100 percent than you think, risking the possibility of trapped assets once you cross the 100 percent funded status threshold. Companies with modest underfunding of, or adequately funded, material pension liabilities are therefore in the prime window of opportunity to focus on de-risking and creating additional financial flexibility. Shifting pension risk to a qualified annuity provider may be more viable than ever. The scenario below illustrates the combination of discount rates and equity returns—and the resulting funded status.


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