We understand the risks associated with pension plan liabilities and how they can affect your organization’s balance sheet, cash flow, and income statement. And more and more, we’re noticing that these liabilities are becoming harder for companies to manage in today’s market and regulatory environment. That’s why organizations like yours are taking concrete steps to mitigate the risks associated with their pension liabilities.
Your company can mitigate pension plan risk through a variety of strategies, including:
Download our Pension Risk Management Continuum slip sheet to find out how each of these strategies could impact your business.
Growing interest in annuity buyouts
Because of their favorable low risk and costs, interest in annuity buyouts has increased. In an annuity buyout, your company would purchase a group annuity contract from us, transferring some or all of its defined benefit plan’s obligations and related risks to the issuing MetLife insurance company.1 You would retain the plan design features and benefits that your participants are vested in.
Your company should actively prepare to reduce its plan risks so that opportunities are recognized and seized upon.
Examine all current plan costs and the financial impact that a risk reduction strategy may have on funded status, earnings volatility, and ongoing expenses.
Interpret the plan's economic liability — or the cost to settle the liability — and the accounting impacts of such a strategy.
Secure the necessary internal approvals for action.
Keep an eye on market returns and interest rates to identify the right time to implement your risk reduction strategy.