Pension Risk Transfer, pp. 1-7 and 11-46


#1

Reading Source:
https://www.soa.org/Files/Research/Projects/2014-pension-risk-transfer-study.pdf

Topics Covered in this Reading:

  • Executive Summary
  • Background and Purpose
  • Pension Risk Transfer Study & Objectives
  • ERISA Origins
  • Relevance to Multi-employer Plans
  • Emergence of Pension Risk Transfer - Our Perspective
  • Defined Benefit Plans - From HR Focused to Finance-Driven
  • Plan Design
  • Funding or Investment Policy
  • Liability Management
    • Lump sum offerings
    • Group Annuity Purchases
    • Plan Termination
  • Costs Associated with Pension Risk Transfer
    • Buy-out Premium - Consider the “Economic Liability”
    • Accounting (Settlement) Charges - Impact on Profit & Loss (“P&L”)
  • Demand for Pension Risk Transfer - Barriers and Opportunities
    • Barrier for PRT - Continued Funding Relief
    • Opportunity for PRT - Improved Benefit Restriction Metrics
    • Opportunity for PRT - PBGC Premiums
    • Opportunity for PRT - Evolution of Accounting Approaches
    • Opportunity for PRT - Mortality Improvements
  • Is Your Pension Plan “PRT Ready”?
    • Funding Adequacy
    • Plan Governance
  • De-risking and PRT Considerations, Risks and Other Barriers
    • Weighing Factors that Impact Annuity Purchase Price
    • Asset Portfolio and Plan Size
    • Participant Advocacy
    • Reputational Impact
    • Enterprise Risk Management
    • Capacity Constraints
    • Labor Union Considerations
    • Top-25 Restrictions
  • Potential Alternatives & Innovations
    • Asset-in-kind transfers
    • Guaranteed Separate Accounts
    • Annuity Buy-ins
    • Longevity Swaps
    • Reinsurance
    • Re-risking
  • Pension Risk Evaluation - A Guided Framework for Plan Sponsors
    • Identify Options Available
    • Analysis of De-Risking Strategy
    • Understand Group Annuity Pricing
    • De-Risking Execution
    • Framework Summary