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Unlocking Value in Pension Plan Terminations

Glenn O'Brien

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Margaret (Peggy) McDonald

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Plan sponsors need a new blueprint for risk reduction

As the pension plan termination market has matured, a blueprint has emerged—one that places the selection of an insurer toward the end of what is a lengthy process. To follow this blueprint, however, can put organizations at risk, leaving them open to financial and insurer capacity uncertainties.

On the other hand, involving an insurer early in the plan termination process can help sponsors greatly reduce risk through a buy-in. A buy-in guarantees future benefit payments to a select group of participants, transferring market and longevity risk to the insurer at a price consistent with buy-out pricing. With three new potential blueprints for plan termination, plan sponsors can work with an insurer to find the best fit for their needs.

This paper covers mitigating key risks, the benefits of a buy-in, and how an insurer can help unlock value during the plan termination process.

Download the paper here PDF opens in new window

Contact us

Active retirees/participants

prudential.com/retirementgateway

877-778-2100

General inquiries

risktransfer@prudential.com

 

Prudential's Traditional Buy-out is a group annuity contract issued by The Prudential Insurance Company of America (PICA), Newark, NJ. Amounts contributed are deposited in PICA's general account. Any payment obligations or guarantees are contingent on the claims-paying ability of PICA.

Prudential's Portfolio Protected Buy-out is a group annuity contract issued by PICA. Amounts contributed to the contract are deposited in a separate account established by PICA. Payment obligations specified in the group annuity contract are insurance claims supported by the assets in the separate account and, if such assets are not sufficient, by the full faith and credit of PICA.

Prudential's Portfolio Protected Buy-in is a group annuity contract issued by PICA. Amounts contributed to the contract are deposited in a separate account established by PICA. Payment obligations specified in the group annuity contract are insurance claims supported by the assets in the separate account and, if such assets are not sufficient, by the full faith and credit of PICA.

Prudential's Retiree Medical Buy-in is a retiree stop loss contract issued by PICA. Amounts contributed are deposited in PICA's general account. Any payment obligations or guarantees are contingent on the claims-paying ability of PICA.

Prudential and its affiliates are each solely responsible for their own contractual and financial obligations. All guarantees are subject to the claims-paying ability of the issuing insurer.

Products not available in all states.

Reinsurance products are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or The Prudential Insurance Company of America (PICA), Newark, NJ. Both are wholly owned subsidiaries of Prudential Financial, Inc. (PFI) and neither of them nor PFI have any affiliation with Prudential plc of the United Kingdom. Each company is solely responsible for its financial condition and contractual obligations. Neither PRIAC nor PICA are authorized or regulated by the U.K. Prudential Regulation Authority or regulated by the Financial Conduct Authority, nor do they offer insurance or reinsurance in the United Kingdom. Neither PRIAC nor PICA are authorized or regulated by the Office of Superintendent of Financial Institutions for Canada or by the Financial Services Commission of Ontario. Neither PRIAC nor PICA are authorized or regulated by supervisory authorities in the European Economic Area (EEA). PRIAC and PICA provide insurance products for U.S. pension plans and off-shore reinsurance to companies that have acquired U.K. pension risk through transactions with U.K. plan sponsors.

Securities products are offered by registered representatives of Prudential Investment Management Services, LLC (PIMS), Newark, NJ.

© 2020 Prudential Financial, Inc. and its related entities. Prudential, Prudential Retirement, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. (PFI) and its related entities, registered in many jurisdictions worldwide. Prudential Retirement is a PFI business.

PRIAC, PICA and PIMS are Prudential Financial companies.

CA Certificate of Authority (PICA) For Compliance Use Only #1179 and CA Certificate of Authority (PRIAC) For Compliance Use Only #08003

 

For compliance use only: 1041777-00001-00