In 2012, Ford, GM and Verizon took action to reduce the size of their pension plans, which served as the watershed moment for pension risk transfer. While we have not seen another year with quite the headline magnitude since then, lump-sum offerings have become ubiquitous. Annuity purchase transactions have taken more time to catch momentum, but each year, the volume increases, with more sponsors open to offloading liabilities to insurers. Termination, once a rarity among larger defined benefit (DB) plan sponsors, has started to become more common and has become a short-term goal for many sponsors.
In this paper, we cover the risk transfer options available to DB plan sponsors and the considerations of pursuing this type of strategy.