Global Institutional Annuity Market Update

Size: px
Start display at page:

Download "Global Institutional Annuity Market Update"

Transcription

1 Global Institutional Annuity Market Update Liability De-Risking / Plan Terminations Mid-Year 2012 Hewitt EnnisKnupp, An Aon Company 2012 Aon Corporation Brief Description: This newsletter reviews the international annuity market in the first half of 2012, how the General Motors announcement affects other sponsors considering an annuity purchase in the near future, and the financial impact of offering retiree lump sums.

2 Mid-Year International Market Update United States In the first half of 2012, there were105 annuity placements worth a total of about $745 million, as reported to us by the insurance companies surveyed below. This greatly surpassed the annuity placement premium in the first half of 2011, which totaled $252 million. The majority of premium in the first half of the 2012 was placed with MetLife, Mass Mutual and Principal, respectively. In July, another $523 million of annuity premium was transacted through Hewitt EnnisKnupp. Therefore, we expect year-to-date sales through the third quarter to be over $1.5 billion and that the level will be well over $10 billion by year-end 2012, after the General Motors transaction closes with Prudential. The data comes from a survey of true pension annuity close-out deals (in addition to buy-ins and carve outs in advance of full close-outs) from 10 insurance companies (11 companies from 2005 to 2009) currently active in the annuity marketplace. Other industry sources report similar data but may include other types of placements, such as early retirement incentive programs, annuitization of defined contribution plan balances, and internal conversions of unpurchased defined benefit annuities. Insurance companies currently surveyed include: American General Life John Hancock Life Massachusetts Mutual Life ( MassMutual ) Metropolitan Life ( MetLife ) New York Life Pacific Life Principal Life Prudential Insurance Company of America Transamerica Life United of Omaha Life 1

3 No single insurance carrier has monopolized the industry in the last several years. Industry sales leaders in terms of total premium have been: Year Market Leader 2005 Principal 2006 John Hancock 2007 Transamerica 2008 MetLife 2009 MassMutual 2010 MetLife 2011 Prudential Annuity placement inquiries have been on the rise, even with the continued low interest rate environment. As sponsors decide to de-risk their pension plans, they are contemplating various options such as partial plan settlements, dollar cost averaging strategies and other liability risk management solutions. The trend to inquire about annuity placements coupled with client consideration of lump sum windows creates an opportunity for firms to lower the potential volatility in their defined benefit plans. We strongly anticipate an increase in placements over the next 12 to 24 months. 2

4 Immediate annuity purchase rates fell over the first half of the year by about 20 basis points. Deferred rates fell 10 basis points over the same time period. The reason for the decline is that insurance annuity rates are tracking with the fall in market interest rates. The chart below illustrates annuity pricing and market interest rates since January % Historical Sample Annuity Pricing Rates Deferred Rate (Duration=15) 6.0% Immediate Rate (Duration=7) 30-Year Treasury Rate 10-Year Treasury Rate 5.0% Interest Rate 4.0% 3.0% 2.0% 1.0% Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Note: Rates are derived from a Hewitt EnnisKnupp survey completed monthly by eleven insurance companies currently active in the marketplace. (3/31/2012 and forward excludes Transamerica, which is currently on bidding hiatus.) The rates since 2011 are derived from the highest (most aggressive) interest rates available in the marketplace on plain vanilla cases as of the last working day of the calendar month. Since rates vary so much intraday, quotes are generally only held open for a couple of hours on the day they are published. 3

5 Immediate Annuity Rates Deferred Annuity Rates Rates as of: Low High Low High 8/31/ % 2.85% 3.15% 3.53% 7/31/ % 2.87% 3.14% 3.52% 6/30/ % 3.05% 3.35% 3.73% 5/31/ % 2.90% 3.26% 3.64% 4/30/ % 3.07% 3.42% 3.80% 3/31/ % 3.24% 3.65% 4.03% 2/29/ % 3.18% 3.55% 3.93% 1/31/ % 3.20% 3.51% 3.89% 12/31/ % 3.27% 3.45% 3.83% 11/30/ % 3.53% 3.66% 4.04% 10/31/ % 3.39% 3.68% 4.06% 9/30/ % 3.37% 3.60% 3.98% 8/31/ % 3.58% 3.96% 4.34% Note: Pricing interest rates can vary for many reasons. For estimate purposes, the low end of the range should be the starting point for cases that have complex plan provisions, contain data that has not been scrubbed, have cash balance and/or employee contributions, etc. Extra conservatism for such circumstances should possibly be added to lower the estimated rate even further. The Aon Hewitt Pension Risk Tracker reported that the aggregate U.S. funded ratio of all pension plans in the S&P 500 had significant improvement during the first quarter, from 81.5% to 88.5%. Marginally higher corporate bond yields used to discount pension liabilities caused pension liabilities to decrease by 0.4%. Ten-year treasury yields jumped up by 0.34% over the first quarter and credit spreads narrowed by about 0.26%, which increased corporate bond yields by about 0.08%. Finally, pension assets continued to increase, by about 8.2%, due to strong performance in the equity markets during the quarter. The funded ratio fell through April down to 85.2%,through May down to 79.2%, and rebounded in June only to about the level at the start of the year, 81.0%; thereby giving away all the gains for the year. In the second quarter, pension liabilities shot up by 9.0%, primarily due to a significant drop in corporate bond yields used to discount pension liabilities. Ten-year treasury yields fell by 0.56% over the quarter, while credit spreads narrowed by about 0.14%, resulting in one of the historically low corporate bond yields of 3.90% at the end of the quarter. Pension assets did not help much and were overall flat for the quarter with negative equity returns nullified by positive bond returns. 4

6 Canada During the first two quarters of 2012, group annuity total premiums placed with the major Canadian insurance companies were at $308 million for the first quarter and $118 million for the second quarter, for a total of $426 million. The second quarter 2011 year-to-date total annuity placements, in comparison, totaled $481 million. This low premium activity level may provide opportunity to potentially obtain competitive pricing until the end of 2012, as several Canadian insurance companies search for new sales in this space. This window of opportunity may be quite favorable for the purchase of group annuity contracts, and it may be optimal for some plans to act in a timely manner. Finally, in August 2012, the Canadian Institute of Actuaries (CIA), the national organization of the actuarial professionals in Canada, revised their discount rate guidance for estimating the cost of purchasing non-indexed group annuities for hypothetical wind-ups and solvency valuations. This discount rate guidance for estimating annuity pricing for non-indexed pensions, which uses Government of Canada long-term bond yields (GoC) plus a 90 basis points (bps) margin at the valuation date, was revised by a decrease of 10 bps, to reflect an 80 bps margin over the GoC bonds. This change was a result of the collection of market information on pricings by the CIA in the second quarter of 2012 and as such, was judged to be appropriate. For more information, please contact Tony Ioanna at

7 United Kingdom There were 27 cases written in the first quarter of 2012 in the UK, with a total value of 491 million. This is less than half the number of cases written in the record-breaking prior quarter and less than 16% of the value written in the prior quarter. We believe this partly reflects a trend that some providers can come under pressure to complete transactions prior to their year end. However, the first quarter of 2012 was more successful than the first quarter of 2011, when 348 million of business was placed. Pension Insurance Corporation (PIC) topped the universe of providers, writing almost 70% of all business placed in the market during the first quarter. MetLife, Legal & General (L&G) and Aviva continued to write smaller deals successively over the quarter. Lucida also made a positive start to the year with a fresh transaction. Other providers, that tend to focus on larger transactions, did not place new business in the first quarter, with some auctions curtailed by trustee concerns over funding volatility in the quarter. There were no deals of ground-breaking proportions in the quarter. Despite the market's focus on pensioner buy-in opportunities, the actual business placed in the first quarter was unusually mixed: Three of the four PIC transactions were related to full scheme buy-outs. These were for two Denso (high-tech manufacturer) schemes where the transactions included cover for additional risks and terms to secure benefits that were still accruing for active members, and for the Mercers' Company. Their fourth transaction was a pensioner buy-in of over 100 million (advised by Aon Hewitt). The Lucida transaction was also unusual, as it related to the securing of deferred members. These relate to the Newell Rubbermaid UK Pension Scheme (also advised by Aon Hewitt) and follow a previous placement of pensioner liabilities with Lucida. There was a pattern of follow-on transactions occurring with the larger deals in the first quarter. The transactions for Newell, Denso and the undisclosed PIC buy-in all relate to employers that had conducted previous bulk annuity transactions, allowing them to more easily get ready for a further placement. Placements nearly doubled in the second quarter of 2012: 45 cases were written for a total value of 914 million. PIC again topped the universe of providers, writing over 44% of all business placed in the market during the second quarter, with MetLife, L&G and Aviva continuing to write smaller deals successively over the quarter. Pipeline activity remains buoyant in terms of quotations being sought. Pricing opportunities continue to be available for schemes holding gilts. The opportunity to swap gilts for a pensioner buy-in, which provides a higher return as well as a longevity hedge, continued over the second quarter. There were no longevity swap deals during the first quarter, but there was a longevity swap deal covering 1.4 billion of pensioner liabilities for Akzo Nobel during the second quarter. For more information, please contact Paul Belok at +44 (0)

8 Mexico In Mexico, pension plan topics are relatively new. As mentioned in previous issues, the retirement savings culture is not common. However, the Mexican government is making efforts to promote it since the Social Security Law change in In 1997, Social Security Law passed from a Defined Benefit scheme (Law 73) to a Defined Contribution scheme (Law 97). Employees in Law 73 are the transition generation. They will be entitled to select the benefit they want to receive (either Law 73 or Law 97). The annuity market is linked to Social Security pension payments and there are 10 insurance companies that provide Social Security life annuities. Only a couple of companies offer private retirement life annuities. Cumulative premiums for the last two years and the first half of 2012 are as follow: Premiums Figures in US (000s) Period ending Mar $256,704 $267,460 $312,490 Jun $549,114 $516,012 $604,112 Sept $821,168 $814,554 $0 Dec $1,132,037 $1,124,940 $0 Exchange Rate: $1 USD = 14 Mexican pesos During 2009, total annuity premiums were $650 million USD, so there was a 74% increase for However, there was a decrease of 0.63% in Premiums in the first half 2012 increased by 17% from the first half of Every year more Pension Plans are implemented. While the transition generation of Social Security is decreasing and the new generation is increasing, the annuity market and retirement savings culture will acquire greater importance in Mexico. For more information, please contact Patricia Barra at +52 (55) x

9 General Motors Announces Pension Settlement Is this the Tip of the Iceberg for Group Annuity Placements? On June 1, 2012, General Motors Co. (GM) announced it will be eliminating approximately $26 billion in pension liabilities by offering a one-time lump sum option to 42,000 of its 118,000 salaried retirees and beneficiaries. For those 76,000 retirees and beneficiaries that were not offered the lump sum plus those that do not elect the lump sum, annuities will be purchased through a group annuity contract with Prudential Insurance Company. This group annuity contract will be the largest of its kind issued to date. As shown on page 1, this transaction could end up larger than all of the 1,300 transactions completed over the past seven years combined. What does this mean for plan sponsors that are contemplating reducing their pension obligations through the purchase of annuities in the future? How will a transaction of this kind affect insurance company capacity? We believe that these partial plan settlements are just the tip of the iceberg. While the insurance industry has written about $10 billion in premium since 2005, our studies have shown that the current insurance company capacity is over $60-80 billion per year. There are nine insurance companies currently active in the group annuity market. While several insurance companies such as The Hartford and John Hancock have exited the market in the past few years, there are several companies considering entering the market in the future. Insurance companies are also looking at unique ways to structure jumbo transactions as defined as over $1 billion USD. All transactions to date have been structured as a single premium cash transfer. The approach plan sponsors and insurers are contemplating include asset-in-kind transfers. This involves the insurance company, plan sponsor and advisors working closely together to determine an asset mix that the insurance companies can accept whereby creating an optimum portfolio for both parties. Insurance companies find group fixed immediate annuities (retirees) attractive because it can serve as a natural hedge to their life insurance line of business. Therefore, we do not see that annuity pricing or capacity will be an issue in 2012 or According the Glenn O Brien, Managing Director, Pension and Structured Solutions at Prudential Insurance Company of America, The cost and complexity of managing a pension plan in today s environment has made pension risk transfer and partial risk transfer strategies much more attractive to sponsors and their investors. Helping to secure retirement income for participants and provide risk reduction for businesses is something our industry can do on a large scale. The GM transaction has answered many of the questions that have been in the market for a few years and provides a path forward for other sponsors. Ed Root, Vice President at Metropolitan Life Insurance Company, states Jumbo Defined Benefit Pension Plan Sponsors (those with liabilities over $1 billion) have been very interested in doing Pension Risk Transfer (PRT) deals for several years. However, there has been a delay in transactions due to the recession and its negative effects on funded status, the disconnect between accounting liabilities and economic liabilities, [coupled with] a reluctance by many plan sponsors to be the first jumbo deal. The PRT market will likely accelerate now that GM has announced its groundbreaking PRT deal. This deal legitimizes PRT and forces all plan sponsors to ask the question Should we do this also? The most likely candidates for PRT are frozen DB Pension Plans that have no new entrants and have stopped benefit accruals. A plan freeze is tacit admission that a plan sponsor will do PRT but now it is a question of the right timing. Large PRT deals will usually start first with the retirees only (such as in the GM deal) because it is much easier and quicker than including the actives and terminated vested participants. 8

10 The life insurance industry does have a large capacity to transact billions of dollars in PRT deals in addition to the GM deal. We don't see any near term capacity issues. As the market continues to expand in the next few years we expect to see new life insurance company entrants, perhaps from the UK market, as well as new deal structures that will add to industry capacity. There are also many financial issues for a plan sponsor to consider when looking at pension plan settlements. Issue Considerations Group Annuity Liabilities Can be 10% larger than PBO Anti-Selection Risk, if lump sums offered to retirees Asset Decisions and Allocations before settlement actions Today s Low Interest Rates Settlement Accounting Can increase costs 5 15% Need to address liquidity, hedging, and an in-kind portfolio transfer Will rates remain low? If no settlements now, prepare for environment deemed more favorable Impact on results and ties to mark-to-market accounting trend For more information on the GM pension settlement actions and considerations for plan sponsors, please see Aon Hewitt s white paper on the topic: https://ctech.rproxy.hewitt.com/hig/filehandler.ashx?fileid=6742 9

11 The Financial Impact of Offering Retiree Lump Sums In recent months, several high-profile companies have announced large-scale pension lump sum offers to their retirees and other former employees. The simple goal is one of reducing their corporate pension plan financial risk. Notwithstanding such offers by GM, Ford, and many other prominent sponsors, lump sum initiatives are not new. Their re-emergence coincides with a critical change in pension law. Prior to the Pension Protection Act, lump sums were typically calculated using the 30-year Treasury yield as a discount rate. This made lump sum payouts of vested pension benefits considerably more expensive than purchasing annuities to settle the same obligations. Annuity options were especially attractive relative to lump sums when credit spreads widened, lowering their relative value. However, there have been times, especially in an inverted yield curve environment, where lump sums could appear more cost effective than annuities. Ever since the Pension Protection Act transitioned the minimum lump sum basis to corporate bond yields, lump sums have been viewed as a very attractive liability mitigation option to remove pension obligations. With the Ford and GM announcements, these sponsors are offering lump sums to retirees receiving annuity payments. While it has been atypical for plan sponsors to offer lump sums to retirees in the past, we have seen it very sporadically. However, it is likely that we may see other companies choose this derisking strategy. Sponsors are now asking, is it worth doing a lump sum offering to retirees? While there are numerous factors to consider, we want to focus on one core factor - economics. Is it economically better to offer a lump sum than not? There are two critical financial issues that plan sponsors need to consider: 1) How many people are going to take the lump sum? 2) Once lump sums are paid, remaining benefits must either be paid from the plan as before, or settled via an annuity purchase. So how large is the residual benefits cost? These two issues go hand-in-hand when deciding the economics. How Many Will Take It? While no formal studies exist, our experience tells us that when active employees or terminated vested participants are offered a lump sum during plan termination, a high percentage of participants will opt for it. Although this varies by plan, we might see as high as an 80% to 95% range for actives and a 60% to 80% range for terminated vesteds. These take rates will depend on many behavioral economic issues such as age, gender, benefit size, wealth, health, and many other factors. There is a different dynamic with take rates for lump sum windows for terminated participants as part of a de-risking strategy. These options have become very popular with Aon Hewitt s clients. Our recent survey showed that 13% of our pension clients have decided to implement lump sum windows where their terminated vested participants can elect a lump sum. Also we found that another 42% are considering the option. We are now gathering data to determine whether lump sum take rates will be as high for a lump sum window as with a plan termination. Under a termination, a participant has to make an election because the plan is going away. However in a lump sum window, the participant is not forced to make a decision per se because the plan will still exist after the offer has expired. Again, another dynamic one needs to consider is that unlike retirees, terminated vesteds participants are not receiving a benefit check, so their decisions may not have an immediate financial behavior-altering consequence for the individuals. 10

12 The GM and Ford dynamics provide an even further differentiation because lump sums are offered to participants who have commenced annuity payments. The new question is what will take rates be for retirees? As we have inferred, it may not be an easy decision for retirees to make. Jennifer Orzell, Assistant Vice President and Actuary at Mass Mutual says, Retirees may now be in a position where they need to decide if they want to take the risk of managing a lump-sum investment versus continuing to receive their guaranteed lifetime income. It may be an overwhelming decision for someone to make several years into retirement. Although very true, the economics again may dictate whether to offer the lump sum or not. Does it matter - Purchasing Annuities for the Rest or Leaving Them in Your Plan? If you offer a retiree lump sum, what do you do with the remaining retirees who do not take it? Ford decided to leave the remaining retirees on its balance sheet, while GM decided to purchase annuities with Prudential for its remaining retirees. Regardless of approach, there is a dynamic called anti-selection risk that insurers will price into the assumed remaining liability. Plan sponsors may also want to account for anti-selection cost in their remaining PBO, should they choose to hold it within the plan. The source of anti-selection risk is simple. Insurance companies will assume standard longevity assumptions for a representative group of annuitants because everyone is homogenous and should reflect the general population, all other things equal. However, if individuals can choose whether they want to take a lump sum or not, then it stands to reason that people who think they are healthier will keep the annuity and people who are not as healthy will take the lump sum. Evidence of this phenomenon is clear in the insurance retail annuity market. It is known that longevity in the retail space is greater than in the institutional market for situations when a lump sum option is not available. This is because less-healthy individuals will tend to prefer the lump sum, making the residual retail annuity buyer pool healthier than the general population. When you adjust for the retail distribution cost and make the offerings apple-to apples, the insurer will need to add an additional cost adjustment in the retail market for this anti-selection exposure. The differential absent distribution cost is primarily the introduction of choice in the retail annuity space. The Longevity Gamble Ultimately, it is especially difficult for younger individuals to guess their own longevity. An individual who is 40 years old, for the most part will not have as much insight into his/her remaining lifespan as will a 70 year old. Therefore, when lump sums are offered from a plan, we see that anti-selection costs are much lower for the 40 year group, than the 70 year old group. This has implications for all plans offering lump sums, but specifically companies offering lump sums to retirees. There is an additional wild card to consider and that is the percentage of individuals willing to take a lump sum. If nobody takes a lump sum, or if everyone does, then there is little or no anti-selection cost. Assuming the lump sum basis is a fair one, potential anti-selection cost will usually peak at a lump sum take-rate of around 50%. This is because the healthier people will want to maximize the value of their longer expected lifespan by taking the annuity, while others will maximize their benefits by taking the lump sum. As the percentage of individuals who take the lump sum increases well beyond 50%, then not only are less-healthy people taking the lump sum; healthier individuals are too. So the potential anti-selection cost will decline for the remaining smaller group who take the annuity. We have done sophisticated analysis at Aon Hewitt to help clients think through the anti-selection implications of a lump sum offering. Our initial view is that the cost can range from 5% to 15% of the total obligation depending on who is offered the lump sum and the overall acceptance rates. While we agree that both annuity purchases and lump sum offerings are very effective tools at helping plans de-risk, it is critical to think through all the cost and implications before executing these strategies. 11

13 Contact Information U.S. Team Robin Gantz, Senior Consultant Hewitt EnnisKnupp, an Aon Company Canada Tony Ioanna, Vice President Aon Hewitt Steve Shepherd, Associate Principal Hewitt EnnisKnupp, an Aon Company Jennifer Lawrence, Consultant Hewitt EnnisKnupp, an Aon Company United Kingdom Paul Belok, Principal & Actuary Aon Hewitt +44 (0) Mexico Patricia Barra Aon Hewitt Mexico +52 (55) x2821 About Hewitt EnnisKnupp Hewitt EnnisKnupp, Inc., an Aon company, provides investment consulting services to over 500 clients in the U.S. and abroad with total client assets of over $2 trillion. Our more than 200 investment consulting professionals a result of the merger of Hewitt Investment Group, Ennis, Knupp & Associates, and Aon Investment Consulting advise endowment, foundation, not-for-profit, corporate, and public pension plan clients ranging in size from $3 million to over $740 billion. 12

Global Institutional Annuity Market Update

Global Institutional Annuity Market Update Global Institutional Annuity Market Update Liability De-Risking / Plan Terminations Fourth Quarter 2011 Hewitt EnnisKnupp, An Aon Company 2012 Aon Corporation Brief Description: This newsletter reviews

More information

Global Institutional Annuity Market Update

Global Institutional Annuity Market Update Global Institutional Annuity Market Update Liability De-Risking / Plan Terminations Year-End 2012 Hewitt EnnisKnupp, An Aon Company 2013 Aon Corporation Brief Description: This newsletter reviews the international

More information

Global Institutional Annuity Market Update

Global Institutional Annuity Market Update Global Institutional Annuity Market Update Liability De-Risking/Plan Terminations Second Quarter 2014 Hewitt EnnisKnupp, An Aon Company 2014 Aon plc Brief Description: This report reviews the international

More information

Annuity Market Quarterly Update

Annuity Market Quarterly Update Annuity Market Quarterly Update November 2010 2010 Aon Corporation Brief Description: Despite the rebound in the third quarter, many pension plans remain underfunded. On top of that, annuity interest rates

More information

GM Pension Settlement Actions

GM Pension Settlement Actions Consulting Retirement GM Pension Settlement Actions And Considerations for Plan Sponsors June 2012 On June 1, 2012, General Motors Co. (GM) announced a program that will settle approximately $26 billion

More information

Verizon Announces $7.5 Billion Pension Settlement

Verizon Announces $7.5 Billion Pension Settlement Consulting Retirement Pension Settlement Trend Accelerates with Verizon Annuity Purchase Insights Into the Evolving Pension Transfer Environment October 2012 Verizon Announces $7.5 Billion Pension Settlement

More information

Pensions and the Future of Retained Risk

Pensions and the Future of Retained Risk Institutional Investor Corporate Financial Executive Summit Pensions and the Future of Retained Risk June 19, 2013 Glenn O Brien Managing Director, Pension Risk Transfer Prudential Retirement 0246029-00001-00

More information

Pensions and Longevity

Pensions and Longevity Steve Forrest Managing Director Risk Finance,, London steve.forrest@guycarp.com November 2008 Pensions and Longevity Risks and Opportunities in UK and Europe +44 207 357 5653 www.guycarp.com Developments

More information

De-risking Alternatives for Plan Sponsors Compliance Requirements. April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores

De-risking Alternatives for Plan Sponsors Compliance Requirements. April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores De-risking Alternatives for Plan Sponsors Compliance Requirements April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores Today s elunch Presenters Michael Falk Partner, Employee Benefits

More information

Lump Sum Term-Vested Payouts Is Now the Time?

Lump Sum Term-Vested Payouts Is Now the Time? Institutional Group Lump Sum Term-Vested Payouts Is Now the Time? After a difficult five years overseeing pensions, plan sponsors in the U.S. and Canada are finding pension funding levels the healthiest

More information

Bulk Terminated Vested Lump Sum Offerings

Bulk Terminated Vested Lump Sum Offerings INSIGHTS Bulk Terminated Vested Lump Sum Offerings August 2015 203.621.1700 2015, Rocaton Investment Advisors, LLC EXECUTIVE SUMMARY * Bulk terminated vested lump sum offerings have become a hot topic

More information

Will They Take the Money and Run?

Will They Take the Money and Run? Will They Take the Money and Run? A Perspective on Pension Lump Sum Cash-Outs November 2012 Lockton Retirement Services The tide is changing in favor of personal financial conservatism. Gone are the days

More information

Important Information about your Annuity Investment

Important Information about your Annuity Investment Robert W. Baird & Co. Incorporated Important Information about your Annuity Investment What is an Annuity Contract? An annuity is a contract between you and an insurance company, under which you make a

More information

Assumptions for Hypothetical Wind-Up and Solvency Valuations with Effective Dates Between December 31, 2013, and December 30, 2014

Assumptions for Hypothetical Wind-Up and Solvency Valuations with Effective Dates Between December 31, 2013, and December 30, 2014 Educational Note Assumptions for Hypothetical Wind-Up and Solvency Valuations with Effective Dates Between December 31, 2013, and December 30, 2014 Committee on Pension Plan Financial Reporting April 2014

More information

MEMORANDUM. To: From:

MEMORANDUM. To: From: MEMORANDUM To: From: All Pension Actuaries Bruce Langstroth, Chair Practice Council Manuel Monteiro, Chair Committee on Pension Plan Financial Reporting Date: January 23, 2015 Subject: Educational Note

More information

UK longevity risk transfer market implications for Asia

UK longevity risk transfer market implications for Asia UK longevity risk transfer market implications for Asia David O Brien FSA MAAA FIA SCOR Global Life 1 Longevity 1 Global trends in longevity 2 UK Market developments 3 Applications for Asia Pacific markets

More information

NAPF - PENSION BUY-INS AND BUY-OUTS. Harry Harper, FIA. June 2014

NAPF - PENSION BUY-INS AND BUY-OUTS. Harry Harper, FIA. June 2014 NAPF - PENSION BUY-INS AND BUY-OUTS Harry Harper, FIA June 2014 Buy-ins and buy-outs Agenda Insurance market development in 2014 Bulk annuity and investments Purchasing a bulk annuity earlier Data preparation

More information

Pension plan terminations: Minimizing cost and risk

Pension plan terminations: Minimizing cost and risk Pension plan terminations: Minimizing cost and risk Vanguard commentary May 2011 It is well understood and accepted these days that the nature of a pension plan s liability affects its investment strategy

More information

Pension De-Risking Outlook for Canada The Role of Reinsurance. Alka Gautam, mba, cpa, ca

Pension De-Risking Outlook for Canada The Role of Reinsurance. Alka Gautam, mba, cpa, ca Pension De-Risking Outlook for Canada The Role of Reinsurance Alka Gautam, mba, cpa, ca President and Chief Executive Officer RGA Life Reinsurance Company of Canada Defined benefit pension plans are excellent

More information

Investment opportunities Locking the potential of future benefits

Investment opportunities Locking the potential of future benefits Investment opportunities Locking the potential of future benefits Ivo van der Veen Senior Manager Risk Services Deloitte Sjoerd Kampen Junior Manager Risk Services Deloitte 72 The last couple of years

More information

RETIREMENT PLAN STRATEGIES

RETIREMENT PLAN STRATEGIES 0213702 For Plan Sponsor and Advisor Use - Public Use Permitted. RETIREMENT PLAN STRATEGIES De-risking pensions emerging opportunity through lump sum cash-outs under the Pension Protection Act of 2006

More information

Pension Buyout Reality Check How Actuarial Assumptions Cloud Perceptions of Annuity Buyout Pricing

Pension Buyout Reality Check How Actuarial Assumptions Cloud Perceptions of Annuity Buyout Pricing How Actuarial Assumptions Cloud Perceptions of Annuity Buyout Pricing Recent annuity purchases highlight the need to examine what drives their pricing. Plan sponsor announcements that allude to par settlements

More information

Recent Trends In Pension Buyouts And Lump Sum Offers

Recent Trends In Pension Buyouts And Lump Sum Offers Portfolio Media. Inc. 860 Broadway, 6th Floor New York, NY 10003 www.law360.com Phone: +1 646 783 7100 Fax: +1 646 783 7161 customerservice@law360.com Recent Trends In Pension Buyouts And Lump Sum Offers

More information

An annuity buy-in transfers all the risks for a group of members from the plan sponsor s balance sheet to

An annuity buy-in transfers all the risks for a group of members from the plan sponsor s balance sheet to DB Solutions Risk less Annuity buy-in (Pensurance ) Risk transfer for underfunded plans An annuity buy-in transfers all the risks for a group of members from the plan sponsor s balance sheet to Sun Life

More information

Pension Settlements Through Terminated Vested Lump Sum Windows

Pension Settlements Through Terminated Vested Lump Sum Windows Pension Settlements Through Terminated Vested Lump Sum Windows Insights into Plan Sponsor Experience February 2013 Retirement port 2013 Aon plc Document Title Sub-Title of Report Document Date Summary

More information

Using liability-driven investing to derisk corporate pension plans

Using liability-driven investing to derisk corporate pension plans EATON VANCE NOVEMBER 2015 TIMELY THINKING Using liability-driven investing to derisk corporate pension plans SUMMARY Defined benefit (DB) pension funding ratios remain near decade lows. Underfunded pension

More information

Alternative Settlement Methods for Hypothetical Wind-Up and Solvency Valuations

Alternative Settlement Methods for Hypothetical Wind-Up and Solvency Valuations Educational Note Alternative Settlement Methods for Hypothetical Wind-Up and Solvency Valuations Committee on Pension Plan Financial Reporting September 2013 Document 213082 Ce document est disponible

More information

These aren t your grandmother s annuities. Brent Simmons Senior Managing Director, Defined Benefit Solutions

These aren t your grandmother s annuities. Brent Simmons Senior Managing Director, Defined Benefit Solutions These aren t your grandmother s annuities Brent Simmons Senior Managing Director, Defined Benefit Solutions AGENDA 1 2 3 New philosophy Risk transfer innovations Pricing insights Page 2 NEW PHILOSOPHY

More information

A U.S. Perspective on Annuity Lifetime Income Guarantees

A U.S. Perspective on Annuity Lifetime Income Guarantees A U.S. Perspective on Annuity Lifetime Income Guarantees Jacob M. Herschler June 8, 2011 Mexico City Agenda Defined Benefit and Defined Contribution plan trends in the U.S. and prospects for longevity

More information

Pension De-Risking Strategies Latest Developments and Trends. June 30, 2015

Pension De-Risking Strategies Latest Developments and Trends. June 30, 2015 Pension De-Risking Strategies Latest Developments and Trends June 30, 2015 Speakers Contact Information Tonya Manning, FSA, EA, MAAA Chief Actuary, Wealth Practice tonya.manning@xerox.com Phil Parker,

More information

Vested Termination Lump Sum Window Right for your company? September 25, 2014

Vested Termination Lump Sum Window Right for your company? September 25, 2014 Vested Termination Lump Sum Window Right for your company? September 25, 2014 Agenda Background Considerations Administration Communications Wrap Up Q&A 2 Speakers Dean Aloise, ASA, FCA, EA, MAAA Managing

More information

Moving From a DB Executive Retirement Plan to a DC Executive Retirement Plan

Moving From a DB Executive Retirement Plan to a DC Executive Retirement Plan Moving From a DB Executive Retirement Plan to a DC Executive Retirement Plan An analysis of the tax, accounting, regulatory and design factors unique to nonqualified plans Part Three Accounting Implications

More information

Pension. Presented by Frank Minter & Al Duscher

Pension. Presented by Frank Minter & Al Duscher Pension Presented by Frank Minter & Al Duscher DRIVING INTO THE FUTURE AND LOOKING IN THE REARVIEW MIRROR HELPFUL TO UNDERSTAND THE HISTORY OF HOW WE GOT TO WHERE WE ARE NOW WHAT HAS CHANGED? WHY IS ALU

More information

a true partnership approach Buy-outs and buy-ins report 2014

a true partnership approach Buy-outs and buy-ins report 2014 a true partnership approach 3 Introduction 4 Buy-outs and buy-ins market activity 5 Changing market conditions potential opportunities 8 Medical underwriting 9 Assessing a transaction 11 Are insurers safe?

More information

Prudent Risk Management of Variable Annuities in the US. Senior Vice President and Actuary Prudential Annuities

Prudent Risk Management of Variable Annuities in the US. Senior Vice President and Actuary Prudential Annuities Prudent Risk Management of Variable Annuities in the US Bryan Pinsky Bryan Pinsky Senior Vice President and Actuary Prudential Annuities Agenda 1. US VA market overview 2. Risks associated with living

More information

Recent Developments in Individual Life Annuity Markets and Products

Recent Developments in Individual Life Annuity Markets and Products Recent Developments in Individual Life Annuity Markets and Products Presentation by Mark J. Warshawsky Director, Retirement Research, Watson Wyatt Worldwide For a Conference on Global Aging and Financial

More information

Delayed Pension Payment Bulk Purchase Annuity

Delayed Pension Payment Bulk Purchase Annuity Delayed Pension Payment Bulk Purchase Annuity For employee benefit consultants, pension professionals and financial advisers only. Not approved for use with pension scheme members. Contents Delayed Pension

More information

Application of Canadian Pension Plan Solvency Standards

Application of Canadian Pension Plan Solvency Standards Application of Canadian Pension Plan Solvency Standards Introduction The Canadian Standards of Practice broadly apply to any arrangement that provides retirement income irrespective of whether it s funded

More information

Americans love choice. We want the freedom to

Americans love choice. We want the freedom to Be Careful What Lump Sum From a Pension Plan May Not Be Best Choice Americans love choice. We want the freedom to choose everything what car to buy, where to live, what color to paint our houses. In retirement

More information

This document introduces the principles behind LDI, how LDI strategies work and how to decide on an appropriate approach for your pension scheme.

This document introduces the principles behind LDI, how LDI strategies work and how to decide on an appropriate approach for your pension scheme. for professional clients only. NOT TO BE DISTRIBUTED TO RETAIL CLIENTS. An introduction TO Liability driven INVESTMENT HELPING PENSION SCHEMES ACHIEVE THEIR ULTIMATE GOAL Every defined benefit pension

More information

Sample: Proposal Letter and Specifications

Sample: Proposal Letter and Specifications Sample: Proposal Letter and Specifications September 29, 20xx Mr. John Consultant XYZ Corporatio n 123 Mai n Street Anywhere, IL 99999 RE: Retirement Plan for the Employees of XYZ Corporation Non-Participating

More information

How will the new RP-2014 mortality tables affect my DB plan strategy?

How will the new RP-2014 mortality tables affect my DB plan strategy? PRACTICE NOTE How will the new RP-2014 mortality tables affect my DB plan strategy? Justin Owens, EA, FSA, Asset Allocation Strategist ISSUE: The Society of Actuaries (SOA) recently released new mortality

More information

Full Circle: Purchasing Insured Annuities in a Defined-Benefit Plan

Full Circle: Purchasing Insured Annuities in a Defined-Benefit Plan Full Circle: Purchasing Insured Annuities in a Defined-Benefit Plan by Mark Ruloff and Elissa Tauber Presented at Managing Retirement Assets Symposium Sponsored by the Society of Actuaries Las Vegas March

More information

Written Testimony of Stephen A. Keating Co-Founder & Principal. Penbridge Advisors, LLC. ERISA Advisory Council. United States Department of Labor

Written Testimony of Stephen A. Keating Co-Founder & Principal. Penbridge Advisors, LLC. ERISA Advisory Council. United States Department of Labor Written Testimony of Stephen A. Keating Co-Founder & Principal Penbridge Advisors, LLC ERISA Advisory Council United States Department of Labor Hearing on Private Sector Pension De-Risking and Participant

More information

SUPPLEMENT TO ANNUAL FUNDING NOTICE OF MAYO PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015 ( Plan Year )

SUPPLEMENT TO ANNUAL FUNDING NOTICE OF MAYO PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015 ( Plan Year ) SUPPLEMENT TO ANNUAL FUNDING NOTICE OF MAYO PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015 ( Plan Year ) This is a temporary supplement to your annual funding notice.

More information

advisory & Brokerage consulting services Make Your Retirement Savings Last a Lifetime

advisory & Brokerage consulting services Make Your Retirement Savings Last a Lifetime advisory & Brokerage consulting services Make Your Retirement Savings Last a Lifetime Member FINRA/SIPC ADVISORY & Brokerage consulting SERVICES Three Things to Consider When Planning for Retirement Today,

More information

WHAT CAN WE LEARN FROM SIX COMMON ANNUITY PURCHASE MISCONCEPTIONS?

WHAT CAN WE LEARN FROM SIX COMMON ANNUITY PURCHASE MISCONCEPTIONS? THOUGHTCAPITAL OCTOBER 2014 PENSION RISK MANAGEMENT: WHAT CAN WE LEARN FROM SIX COMMON ANNUITY PURCHASE MISCONCEPTIONS? For decades, an annuity purchase has offered a safe and effective way for DB plan

More information

Retirement planning with Group Superannuation. ICICI Prudential Group Superannuation Plan. Eligibility. Superannuation Benefits payable

Retirement planning with Group Superannuation. ICICI Prudential Group Superannuation Plan. Eligibility. Superannuation Benefits payable Retirement planning with Group Superannuation After a valuable professional career with an organization, employees require the security of a regular income flow when they retire. Organizations help employees

More information

Key developments in Pensions De-risking. October 2014

Key developments in Pensions De-risking. October 2014 Key developments in Pensions De-risking October 2014 Transfer Value Exercises: the key points The March 2014 budget was a very exciting development for any sponsor of a DB Scheme Transfer value exercises

More information

G U A R A N T E E D I N C O M E S O L U T I O N S NEW YORK LIFE LIFETIME INCOME ANNUITY

G U A R A N T E E D I N C O M E S O L U T I O N S NEW YORK LIFE LIFETIME INCOME ANNUITY G U A R A N T E E D I N C O M E S O L U T I O N S NEW YORK LIFE LIFETIME INCOME ANNUITY NEW YORK LIFE: BUILT FOR TIMES LIKE THESE New York Life Insurance Company, the parent company of New York Life Insurance

More information

ACCOUNTING STANDARDS BOARD NOVEMBER 2000 FRS 17 STANDARD FINANCIAL REPORTING ACCOUNTING STANDARDS BOARD

ACCOUNTING STANDARDS BOARD NOVEMBER 2000 FRS 17 STANDARD FINANCIAL REPORTING ACCOUNTING STANDARDS BOARD ACCOUNTING STANDARDS BOARD NOVEMBER 2000 FRS 17 17 RETIREMENT BENEFITS FINANCIAL REPORTING STANDARD ACCOUNTING STANDARDS BOARD Financial Reporting Standard 17 Retirement Benefits is issued by the Accounting

More information

THE FIVE MYTHS HOLDING BACK PLAN SPONSORS

THE FIVE MYTHS HOLDING BACK PLAN SPONSORS REDUCING PENSION RISK: THE FIVE MYTHS HOLDING BACK PLAN SPONSORS 5 STOP PRT Scott Kaplan Senior Vice President Pension & Structured Solutions Rohit Mathur Senior Vice President Pension & Structured Solutions

More information

The Future of DB Plan Funding Under PPA, the Recovery Act and Relief Proposals

The Future of DB Plan Funding Under PPA, the Recovery Act and Relief Proposals Page 1 of 5 The Future of DB Plan Funding Under PPA, the Recovery Act and Relief Proposals The overlay of the dramatic decline in asset values of the last few months on the incipient tougher funding requirements

More information

Struggling of Japanese corporate pension plan with the low interest rate environment

Struggling of Japanese corporate pension plan with the low interest rate environment 1 Struggling of Japanese corporate pension plan with the low interest rate environment Takashi Kato 1 Abstract: Most plan sponsors in developed countries are seeking ways to maintain a sustainable corporate

More information

Poll Highlights. PENSION MANAGEMENT RESEARCH PANEL Poll: DB Pension Management Mid-Year 2014

Poll Highlights. PENSION MANAGEMENT RESEARCH PANEL Poll: DB Pension Management Mid-Year 2014 PENSION MANAGEMENT RESEARCH PANEL Poll: DB Pension Management Mid-Year 2014 Poll Highlights In the summer of 2014, the Pension Management Research Panel conducted a poll to uncover current practices in

More information

Delayed Income Annuities / Longevity Insurance. Presented By: Scott White, AAPA, ALMI Annuity Marketing Manager

Delayed Income Annuities / Longevity Insurance. Presented By: Scott White, AAPA, ALMI Annuity Marketing Manager Delayed Income Annuities / Longevity Insurance Presented By: Scott White, AAPA, ALMI Annuity Marketing Manager CPS Overview Founded in 1974 The Largest Independently-Owned Wholesaler of Life, Long Term

More information

Staff Retirement Plan. Net Plan Highlights. Pension Scheme for Staff Joining the Plan on or after April 15, 1998

Staff Retirement Plan. Net Plan Highlights. Pension Scheme for Staff Joining the Plan on or after April 15, 1998 Staff Retirement Plan Net Plan Highlights Pension Scheme for Staff Joining the Plan on or after April 15, 1998 Includes Plan Amendments through January 1, 2009 Contents Click on applicable link Net Plan

More information

THE INSIDER S GUIDE TO THE CANADIAN ANNUITY MARKET

THE INSIDER S GUIDE TO THE CANADIAN ANNUITY MARKET THE INSIDER S GUIDE TO THE CANADIAN ANNUITY MARKET Hugh Kerr Vice- President & Associate General Counsel Heather Wolfe Managing Director, Client Relationships Defined Benefit Solutions Association of Canadian

More information

Lump-Sum Pension Payments: 2008 and Beyond

Lump-Sum Pension Payments: 2008 and Beyond BENEFITS INFORMATION BULLETIN Milliman Employee Benefits December 14, 2007 BIB 07-01 Effective for plan years beginning in 2008, ERISA-covered defined benefit retirement plans that offer participants lump-sum

More information

JUST RETIREMENT (HOLDINGS) LIMITED ( JUST RETIREMENT OR THE GROUP )

JUST RETIREMENT (HOLDINGS) LIMITED ( JUST RETIREMENT OR THE GROUP ) INTERIM RESULTS 9 April 2013 INTERIM RESULTS JUST RETIREMENT (HOLDINGS) LIMITED ( JUST RETIREMENT OR THE GROUP ) Just Retirement, the specialist UK life assurance group focusing on the provision of financial

More information

Important Information about your Annuity

Important Information about your Annuity Robert W. Baird & Co. Incorporated Important Information about your Annuity Annuities are long-term investments that may help you meet or supplement your retirement and other long-term goals. Annuities

More information

Among the most important investment

Among the most important investment Employee Costs and Risks in 401(k) Plans The rapid growth of employer-sponsored 401(k) plans has been facilitated, in part, by the many advantages offered to participants. However, employees also may encounter

More information

THE BEATLES AND PENSION RISK TRANSFER

THE BEATLES AND PENSION RISK TRANSFER THE BEATLES AND PENSION RISK TRANSFER The UK has a long history of creativity and innovation in the music industry the Beatles being a famous example. Their innovation in the pension world is perhaps a

More information

longevity Income Guarantee a safety net of lifetime income for later in life Flexible Access Version Maximum Income Version ANNUITIES income

longevity Income Guarantee a safety net of lifetime income for later in life Flexible Access Version Maximum Income Version ANNUITIES income ANNUITIES income longevity SM Income Guarantee a safety net of lifetime income for later in life Flexible Access Version Maximum Income Version MetLife Investors Longevity Income Guarantee SM is issued

More information

Annuitization lessons from the UK

Annuitization lessons from the UK IMF Seminar on Ageing, Financial Risk Management and Financial Stability The views expressed in this paper are those of the author(s) only, and the presence of them, or of links to them, on the IMF website

More information

Pacific. Income Provider. A Single-Premium, Immediate Fixed Annuity for a Confident Retirement. Client Guide 9/15 80002-15A

Pacific. Income Provider. A Single-Premium, Immediate Fixed Annuity for a Confident Retirement. Client Guide 9/15 80002-15A Pacific Income Provider A Single-Premium, Immediate Fixed Annuity for a Confident Retirement 9/15 80002-15A Client Guide Why Pacific Life Pacific Life has more than 145 years of experience, and we remain

More information

PRELIMINARY REPORT THE PHILOSOPHY UNDERLYING THE DETERMINATION OF LUMP-SUM TRANSFER VALUES FROM PENSION PLANS TASK FORCE ON TRANSFER VALUES

PRELIMINARY REPORT THE PHILOSOPHY UNDERLYING THE DETERMINATION OF LUMP-SUM TRANSFER VALUES FROM PENSION PLANS TASK FORCE ON TRANSFER VALUES PRELIMINARY REPORT THE PHILOSOPHY UNDERLYING THE DETERMINATION OF LUMP-SUM TRANSFER VALUES FROM PENSION PLANS TASK FORCE ON TRANSFER VALUES OCTOBER 1998 1998 Canadian Institute of Actuaries Cette publication

More information

BUYING OUT PENSIONS LIABILITIES - THEORY Vs PRACTISE IAN ALEY - BUSINESS DEVELOPMENT DIRECTOR, PRUDENTIAL DEMETRE LA GRANGE - CONSULTANT, HEWITT

BUYING OUT PENSIONS LIABILITIES - THEORY Vs PRACTISE IAN ALEY - BUSINESS DEVELOPMENT DIRECTOR, PRUDENTIAL DEMETRE LA GRANGE - CONSULTANT, HEWITT BUYING OUT PENSIONS LIABILITIES - THEORY Vs PRACTISE IAN ALEY - BUSINESS DEVELOPMENT DIRECTOR, PRUDENTIAL DEMETRE LA GRANGE - CONSULTANT, HEWITT PRESENTATION OVERVIEW Buy-out costs Vs scheme liability

More information

CREATING A CLEAR PATH TO PENSION PLAN DE-RISKING PENSION RISK TRANSFER STRATEGIES

CREATING A CLEAR PATH TO PENSION PLAN DE-RISKING PENSION RISK TRANSFER STRATEGIES CREATING A CLEAR PATH TO PENSION PLAN DE-RISKING PENSION RISK TRANSFER STRATEGIES STRENGTH STABILITY & INNOVATION DEFINED BENEFIT PLAN SPONSORS FACE UNPRECEDENTED RISK As plan sponsors look down the path

More information

For the Trustees of Defined Benefit Pension Schemes and their Investment Consultants Only.

For the Trustees of Defined Benefit Pension Schemes and their Investment Consultants Only. LGIM SOLUTIONS LEGAL & GENERAL INVESTMENT MANAGEMENT Buy-Out Aware. For the Trustees of Defined Benefit Pension Schemes and their Investment Consultants Only. Preparing for the endgame: a fund range specifically

More information

The Hartford Saver Solution SM A FIXED INDEX ANNUITY DISCLOSURE STATEMENT

The Hartford Saver Solution SM A FIXED INDEX ANNUITY DISCLOSURE STATEMENT The Hartford Saver Solution SM A FIXED INDEX ANNUITY DISCLOSURE STATEMENT THE HARTFORD SAVER SOLUTION SM FIXED INDEX ANNUITY DISCLOSURE STATEMENT This Disclosure Statement provides important information

More information

Future Mutual Income Annuity

Future Mutual Income Annuity Just the facts about New York Life... Future Mutual Income Annuity Issuing company Product type New York Life Insurance Company (NYLIC) 1 A participating flexible premium deferred income annuity (DIA)

More information

The Hartford Saver Solution Choice SM A FIXED INDEX ANNUITY DISCLOSURE STATEMENT

The Hartford Saver Solution Choice SM A FIXED INDEX ANNUITY DISCLOSURE STATEMENT The Hartford Saver Solution Choice SM A FIXED INDEX ANNUITY DISCLOSURE STATEMENT THE HARTFORD SAVER SOLUTION CHOICE SM FIXED INDEX ANNUITY DISCLOSURE STATEMENT This Disclosure Statement provides important

More information

Q1 QUARTERLY GUIDE PENSIONS ACCOUNTING

Q1 QUARTERLY GUIDE PENSIONS ACCOUNTING Q1 QUARTERLY GUIDE PENSIONS ACCOUNTING As at 31 March 2015 Guidance for Finance Directors In association with 1 QUARTERLY GUIDE TO IAS 19 ASSUMPTIONS REPORT MARCH 2015 QUARTERLY GUIDE TO PENSIONS ACCOUNTING

More information

Pension risk management: it s a brave new world

Pension risk management: it s a brave new world Pension risk management: it s a brave new world Pension risk management is on every boardroom agenda these days. For most companies, pension risk means volatility either in cash contributions or accounting

More information

When will the Fund become cash flow negative?

When will the Fund become cash flow negative? LONDON BOROUGH OF BARKING AND DAGENHAM PENSION FUND 001 When will the Fund become cash flow negative? Addressee This paper is addressed to the Officers and Elected Members of London Borough of Barking

More information

Lump Sum Payments for Terminated Vested Participants. 2012 Retirement Webinar Series March 8, 2012

Lump Sum Payments for Terminated Vested Participants. 2012 Retirement Webinar Series March 8, 2012 Lump Sum Payments for Terminated Vested Participants 2012 Retirement Webinar Series March 8, 2012 Lump Sum Payments for Terminated Vested Participants Today s Participants Joe McDonald Aon Hewitt Byron

More information

DEFERRED RETIREMENT OPTION PROGRAMS. Cindy Birley and Kent Eichstadt* William M. Mercer, Inc.

DEFERRED RETIREMENT OPTION PROGRAMS. Cindy Birley and Kent Eichstadt* William M. Mercer, Inc. DEFERRED RETIREMENT OPTION PROGRAMS by Cindy Birley and Kent Eichstadt* William M. Mercer, Inc. Introduction Deferred retirement option programs (commonly referred to as DROP programs) were first introduced

More information

Nigel Nunoo, CFA, FSA, MAAA

Nigel Nunoo, CFA, FSA, MAAA PENSION RISK TRANSFER Nigel Nunoo, CFA, FSA, MAAA Agenda Pension Risk Transfer (PRT) Business Opportunity Background & Context Market Opportunity UK versus US PRT Products Pension Risk Reduction Path &

More information

LDI for DB plans with lump sum benefit payment options

LDI for DB plans with lump sum benefit payment options PRACTICE NOTE LDI for DB plans with lump sum benefit payment options Justin Owens, FSA, CFA, EA, Senior Asset Allocation Strategist Valerie Dion, CFA, FSA, Senior Consultant ISSUE: How does a lump sum

More information

1. Why is GM making these changes to the Salaried Retirement Program (SRP)?

1. Why is GM making these changes to the Salaried Retirement Program (SRP)? GMRetiree.com 060112 1. Why is GM making these changes to the Salaried Retirement Program (SRP)? GM s announced changes to the Salaried Retirement Program (SRP) underscore the company s commitment to retirees

More information

Contents: What is an Annuity?

Contents: What is an Annuity? Contents: What is an Annuity? When might I need an annuity policy? Types of annuities Pension annuities Annuity income options Enhanced and Lifestyle annuities Impaired Life annuities Annuity rates FAQs

More information

Caution: Withdrawals made prior to age 59 ½ may be subject to a 10 percent federal penalty tax.

Caution: Withdrawals made prior to age 59 ½ may be subject to a 10 percent federal penalty tax. Annuity Distributions What are annuity distributions? How are annuity distributions made? How are your annuity payouts computed if you elect to annuitize? Who are the parties to an annuity contract? How

More information

Earning Cash Balance Pay Credits

Earning Cash Balance Pay Credits You Have a Choice New Cash Balance Pension You Have a Choice The important thing to understand is this: If you were hired through December 31, 2012 you don t have to change to the new cash balance pension

More information

Glossary for Use with the Comprehensive Benefit Funding Plan

Glossary for Use with the Comprehensive Benefit Funding Plan Caring For Those Who Serve 1901 Chestnut Avenue Glenview, Illinois 60025-1604 1-800-851-2201 www.gbophb.org Glossary for Use with the Comprehensive Benefit Funding Plan Accumulated Post-Retirement Benefit

More information

May 3, 2012. CC:PA:LPD:PR (Reg-115809-11) Room 5203 Internal Revenue Service PO Box 7604 Ben Franklin Station Washington DC 20044

May 3, 2012. CC:PA:LPD:PR (Reg-115809-11) Room 5203 Internal Revenue Service PO Box 7604 Ben Franklin Station Washington DC 20044 May 3, 2012 CC:PA:LPD:PR (Reg-115809-11) Room 5203 Internal Revenue Service PO Box 7604 Ben Franklin Station Washington DC 20044 RE: Longevity Annuity Contracts To Whom It May Concern: The American Academy

More information

Testimony for IRS Hearing on Proposed IRS REG- 110980-10

Testimony for IRS Hearing on Proposed IRS REG- 110980-10 Financial Engines Testimony for IRS Hearing on Proposed IRS REG- 110980-10 Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options under Defined Benefit Pension Plans

More information

SDBA Investment Options

SDBA Investment Options October 2013 FRS Offers a New Way to Invest: Self-Directed Brokerage Accounts...1 Quarterly Fund Performance Summary...2 Proposed Investment Fund Changes Seek Greater Returns...5 The Investment Plan TIPS

More information

Rehabilitation Plan for the Western Metal Industry Pension Fund. Effective May 28, 2010

Rehabilitation Plan for the Western Metal Industry Pension Fund. Effective May 28, 2010 Rehabilitation Plan for the Western Metal Industry Pension Fund Effective May 28, 2010 Introduction The Pension Protection Act of 2006 (PPA) requires an annual actuarial status determination for multiemployer

More information

Secondary Market Income Annuities

Secondary Market Income Annuities Secondary Market Income Annuities Buyer s Guide Peace of Mind Through Financial Independence Annuity FYI is devoted to helping investors protect their retirement nest egg. Traditional wisdom of retirement

More information

A PROFESSIONAL S GUIDE TO INCOME OPPORTUNITIES USING ANNUITIES

A PROFESSIONAL S GUIDE TO INCOME OPPORTUNITIES USING ANNUITIES A PROFESSIONAL S GUIDE TO INCOME OPPORTUNITIES USING ANNUITIES CPAs Attorneys Enrolled Agents Tax Professionals Professional Education Network TM www.edwardjones.com/teamwork CONTENTS 1 Introduction 2

More information

Variable Annuity Pension Plans: A Balanced Approach to Retirement Risk

Variable Annuity Pension Plans: A Balanced Approach to Retirement Risk Variable Annuity Pension Plans: A Balanced Approach to Retirement Kelly Coffing, EA, FSA, MAAA Principal and Consulting Actuary Milliman, Seattle, Washington Grant Camp, EA, FSA, MAAA, Consulting Actuary

More information

Longevity risk transfer. Cord-Roland Rinke, L&H Asia and Longevity

Longevity risk transfer. Cord-Roland Rinke, L&H Asia and Longevity Cord-Roland Rinke, L&H Asia and Longevity IAA Colloquium 2015 Oslo, 9 June 2015 Introduction Longevity risks RPAT Derivatives Wrap up Disclaimer This presentation does not address the investment objectives

More information

INVESTMENT AND PLANNING SOLUTIONS. Redefine your means in retirement. Member FINRA/SIPC

INVESTMENT AND PLANNING SOLUTIONS. Redefine your means in retirement. Member FINRA/SIPC INVESTMENT AND PLANNING SOLUTIONS Redefine your means in retirement Member FINRA/SIPC INVESTMENT AND PLANNING SOLUTIONS More guaranteed income to count on when you need it to count. It s taking that second

More information

BUY-INS AND BUYOUTS. DAVID COLLINSON HEAD OF STRATEGY Pension Insurance Corporation

BUY-INS AND BUYOUTS. DAVID COLLINSON HEAD OF STRATEGY Pension Insurance Corporation BUY-INS AND BUYOUTS DAVID COLLINSON HEAD OF STRATEGY Pension Insurance Corporation February 2015 Agenda Who is PIC? What is a Buy-in and a Buyout? Why do one and what does it mean? What drives Insurer

More information

MEMORANDUM. To: From:

MEMORANDUM. To: From: MEMORANDUM To: From: All Pension Actuaries Pierre Dionne, Chair Practice Council Simon Nelson, Chair Committee on Pension Plan Financial Reporting Date: January 28, 2016 Subject: Educational Note Supplement:

More information

National Conference on Public Employee Retirement Systems. The Secure Choice

National Conference on Public Employee Retirement Systems. The Secure Choice The Secure Choice Pension (SCP) National Conference on Public Employee Retirement Systems Sponsor Basic Design National Conference on Public Employee Retirement Systems Additional Design Details Funding

More information

Knowledge & Insights 2014 Survey

Knowledge & Insights 2014 Survey Knowledge & Insights 2014 Survey Economic assumptions in accounting for pension and other post retirement benefits Highlights of our annual survey results is pleased to provide a survey of the assumptions

More information

Estimating internal rates of return on income annuities

Estimating internal rates of return on income annuities Estimating internal rates of return on income annuities Vanguard research March 212 Executive summary. This paper presents computations of internal rates of return that would accrue to purchasers of fixed

More information