Blog Article
What is Pension Risk Transfer?
RETIREMENT PLAN STABILITY
Pension Risk Transfer
Helping plan sponsors reduce costs and risks in defined benefit plans through opportunity assessments, insurer negotiations and de‑risking strategies.
Helping You Navigate Your Business' Pension Needs
OneDigital will review your Plan’s Funded Status, Liability Driven Investment Strategy, and Identify Opportunities to Transfer Risk & Costs from the Plan.
OneDigital will review and identify specific groups of retirees in the plan that should be annuitized. OneDigital will then solicit interest from insurance carriers, negotiate pricing, and implement the annuity contract installation for the Plan Sponsor.
As a Plan’s Funded Status improves, the investment strategy should allocate more assets to a liability hedging portfolio (LDI). OneDigital will review and recommend an LDI portfolio that matches your specific Plan liabilities, and how much you should allocate to that portfolio given your Plan’s funded status and contribution strategy.
Resources
Blog Article
What’s the Current State of Defined Benefit Pension Plans?
We're Here to Help
OneDigital is here to help you administer your plan with excellence, helping ensure it works seamlessly for your business and its employees.
Pension Risk Transfer is when a plan sponsor shifts the responsibility of paying its employees’ pensions to an insurance company, helping them manage the financial risks and ongoing costs associated with pension obligations.
Many companies will consider a pension risk transfer to potentially lower expenses and reduce risk while ideally simplifying management of their defined benefit plan.
According to MetLife’s 2025 Pension Risk Transfer Poll, a record 94% of plan sponsors with de-risking goals intend to fully divest their pension liabilities. Why is that?
First, leadership teams have become more knowledgeable when it comes to pension risk transfer solutions and are looking to reduce the amount of risk on their balance sheets.
Second, many plans are currently well-funded or even in surplus due to strong market performance and higher interest rates in recent years. Higher interest rates generally decrease liability valuations, making this an opportune time to offload obligations without requiring large additional cash injections.
Lastly, over the years, there’s been a general shift to move away from DB plans toward Defined Contribution (DC) plans like 401k’s and divesting is a final step in fully exiting the DB space.
Our Pension Risk Transfer team is here to provide you with guidance you need to navigate the needs of your pension plan. Reach out today!
Get In Touch
