Prudential white paper readies plan sponsors for future pension buy-out transactions

Prudential #News Release:

27 May 2015

Prudential white paper readies plan sponsors for future pension buy-out transactions

As Americans continue to live longer in retirement, the need for some employers to de-risk their pension plans is intensifying. And that makes understanding how to execute the most common form of pension risk transfer, a buy-out transaction, all the more crucial. 

Executing a buy-out transaction can significantly reduce or eliminate future pension plan risk for plan sponsors, according to a new white paper from Prudential Retirement, "Preparing for Pension Risk Transfer."

"A plan sponsor doesn’t necessarily need to decide today if a buy-out is right for them, but there are preparations one can undertake today to make a future transaction easier and to shorten the timespan for execution," says Peggy McDonald, senior vice president and actuary with Prudential Retirement’s Pension Risk Transfer team, and one of the authors of the paper.

The white paper outlines the buy-out process in four phases, which include: Preparation, Feasibility, Structure and Refinement, and Execution. The phases can vary based on the size and complexity of the transaction.

"With the influx of high-profile pension risk transfer buy-out transactions in recent years, as well as the funded status volatility and increasing costs associated with pension plans, plan sponsors may find that their chief financial officers and other financial decision-makers are eager to understand the process and assess the potential cost of executing a buyout," says Scott Gaul, senior vice president and head of distribution with Prudential Retirement’s Pension Risk Transfer team.

Want more information? Read "Preparing for Pension Risk Transfer." Want to speak to Peggy or Scott? Contact Josh Stoffregen.