10 things you need to know about the pension settlement marketplace
DESCRIPTION
2012 has witnessed some transformative activities related to corporate pension plan sponsors in the US, taking decisive action to settle pension obligations as part of the larger marketplace trend around pension de-risking. This list was compiled to help frame this trend with stakeholders in the pension marketplace.TRANSCRIPT
10 Things You Need to Know About the Pension Settlement Marketplace
Item #6: There is a growing collection of research and analysis that supports the corporate finance value of transferring pension risk….paying to remove these obligations can be an efficient use of company capital.
Item #7: Pension Risk Transfer media coverage and marketing $$$ are beginning to take hold and pension sponsors are increasingly becoming educated and asking questions about settlements.
Item #8: What if the next 5 years don't produce consistently rising asset values and higher interest rates??? Settling liabilities means coming to term with the real economics of the obligations.
Item #9: Self-insuring a frozen pension plan diverts resources
away from managing and growing your core business.
Item #10: Settling pension liabilities requires additional services and expertise which falls outside the scope of standard pension consulting services
Item #1: For frozen corporate DB plans….settlement is a matter of “WHEN” & “HOW” not “IF”!
Item #2: According to a national consulting firm ‘s analysis, total pension settlement activity over the next 5 years is expected to be $35-$100 billion…..compared to under $10 billion for the collective last five years.
Item #3: Settlement activity and interest is increasing despite the low interest rate/high cost environment. The list of large and mid-sized corporate pension sponsors who are executing settlement projects is growing daily and well chronicled by the media.
Item #4: This year witnessed the decision to purchase the largest single premium group annuity contract ever to closeout $20+ billion in pension liabilities. This transaction is collectively larger than the ENTIRE MARKETPLACE of sold annuity buy-out contracts over the last dozen years.
Item #5: According to a recent survey of senior level financial executives:
53% were “somewhat to very likely” to offer lump sum pension
buy-outs to terminated vested employees (10% are already doing so)
41% were “somewhat to very likely” to transfer pension liabilities
through annuities
For more information contact: Jay Dinunzio [email protected] Phone: 860-507-6344