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Defined benefit plan terminations: Funding and investment strategies

2026-04-30

Justin Owens, CFA, FSA, EA

Senior Director, Co-Head of Total Solutions

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Defined benefit

Thinking of terminating your DB plan? How should the decision affect your funding and investment strategies? Read how to avoid pitfalls and make the best use of available resources.

“All frozen pension plans are plan terminations in waiting.”

As a closed or frozen plan matures, it shrinks over time, and sponsors ultimately decide when—not whether—to terminate. Once termination becomes the goal, funding and investment policies should align with that endgame.

This paper outlines key considerations, including settlement strategies, funding targets above accounting liability, and the role of liability-driven investing in protecting funded status.

Understanding these dynamics can help sponsors make effective use of resources as they prepare for plan termination.

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