Pension risk transfer continues to be a topic of discussion between DB plan sponsors and their advisors and actuaries. Professionals point to increasing PBGC premiums, access to repatriated cash due to tax reform and general pension fatigue as factors that could accelerate risk transfer activity.
I have analyzed and quantified those factors, placing them into a long-term context. While pension risk transfer may be the right option for some plans, the analysis shows that staying the course may make more economic sense over the long term.
My analysis includes:
- The impact of a discretionary contribution to reduce PBGC premiums, relative to opportunity cost
- The impact of PBO liabilities and the cost to annuitize, based on various discount rate scenarios
- How termination cost is materially impacted over 5 years, based on different discount rate/market return scenarios
Read the full commentary:
Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company.