A recent paper published by the Society of Actuaries states that “Since the 2007-2008 recession, de-risking has become the most discussed topic in corporate pension risk management.”
The economic environment over the last decade along with new mortality tables and rising PBGC premiums have put into focus just how out of control pension plan costs can get. On the one hand, the equity markets have been a boon for sponsors for the last seven years, but at the same time interest rates used to value pension liabilities have decreased causing liabilities to spike. In 2014, the Society of Actuaries released updated mortality tables that highlight that pensioners are living longer. Finally, with several rounds of legislation affecting pension plan sponsors over the last five years we have seen dramatic increases in the cost of PBGC premiums. With all of these developments many plan sponsors are left wondering what they can do to manage what is seemingly unmanageable.
Risk management is the process by plan sponsors quantify, minimize, or eliminate the potential risks that the company’s pension plan poses to its organization. These risks commonly include volatility on balance sheet liabilities and income statement expenses as well as large swings in cash contribution requirements.
De-risking has evolved into two main discussion points over the last several years: risk management and risk transfer. Risk management generally starts with plan design features and then moves onto asset solutions such as traditional liability driven investment strategies or up-and-coming structured equity arrangements. Risk transfer, on the other hand, completely eliminates a plan sponsor’s pension obligation. The most common forms of risk transfer available to sponsors have come in the form of lump sum cashout windows for vested terminated participants and annuity purchases for subsets of the participant population.
In this two-hour LIVE webcast, a panel of distinguished professionals and thought leaders will help you understand the important aspects of this significant topic. They will provide an in-depth discussion of Pension Plan De-Risking. Speakers will discuss the possible challenges, implications as well as critical issues surrounding this topic. They will also offer best practices in ensuring compliance with applicable laws.
Key issues that will be covered in this course are:
- Pension Plan De-risking – An Overview
- Pension Plan Liabilities and Benefit Obligations
- Risk Management Techniques:
- Plan Design
- Liability Driven Investing
- Structure Equity
- Risk Transfer Opportunities:
- Lump Sum Cashout Windows
- Annuity Purchases
- Legal Challenges and Risks
Website for Speakers Bios, Agenda & More Info