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Pension Risk Transfer Activity Expected to Increase

MetLife released the results of their 2017 Pension Risk Transfer Poll. Conducted in the second quarter of 2017, the survey assessed the likelihood that 129 defined benefit plans that participated in the survey would conduct risk transfer activities and the drivers behind this action.

 Key findings were the following:

  • About 71% of the respondents had evaluated the financial impact of risk transfer activities, and over 60% had discussed potential risk transfer with key stakeholders, and engaged in preliminary steps to clean participant data.
  • A majority of respondents expressed an increased interest in annuity buyouts, offering them in combination with a lump sum window.
  • With regards to buyouts, these plan sponsors have become more aware of annuity payments-in-kind, and splitting buyouts between multiple annuity providers.
  • The main drivers behind interest in risk transfer activities: rising PBGC premiums, the level of interest rates, and changes to mortality tables, which all increase the cost of funding pension liabilities.