Every sponsor of a frozen defined benefit plan will terminate the plan at some point, requiring the purchase from a life insurer of a group annuity contract, a.k.a. a buyout. The big question for the sponsor is, whether it makes sense to do a full plan buyout soon, to manage the plan and its investments for self-sufficiency for the foreseeable future, or to do something in between.
The presenters will briefly frame the growing importance of this question, and then will interactively present and debate the relative merits of the termination vs. hibernation decision from the plan sponsor perspective, addressing the following considerations:
- Comparing the costs and risks of buyouts versus self-sufficiency
- Making the decision in the context of multiple plan sponsor priorities
- Pricing, timing and capacity issues in the PRT market
- Does a series of buyouts make more sense than a one-time termination?
- How might key considerations change in the future?
Audience questions and comments will be encouraged throughout the presentation.
At the conclusion of the presentation, attendees will be able to:
- Develop an apples-to-apples comparison between the cost to maintain a defined benefit plan and the cost to terminate it
- Know the importance of various plan sponsor considerations in determining whether a buyout is desirable in the near-term
- Know what conditions should be monitored that could affect the decision to implement an annuity buyout