DB plan sponsors are committed to keeping the pension promise. However, in an ever more complex and risky environment, meeting that obligation is a growing challenge for companies that also have to focus on staying competitive and creating shareholder value. Many simply cannot develop or devote the specialized expertise – and often the increased capital – needed to adequately manage and fund a pension plan.
Whatever the founding assumptions might have been, DB plan sponsors currently face the reality of persistently low rates that exacerbate funding shortfalls and depress future return expectations. Volatility in the equity markets is ever present and reducing the number and range of investment opportunities available to pension plans. Even positive news can have a negative impact. People are living healthier and living longer, which means that pension liabilities continue to grow – even for plans that are no longer accepting new members.
Group annuities are a proven and effective risk management solution, widely used in the United Kingdom and Europe, and increasingly popular in the USA and Canada. That’s where pension de-risking can meet the needs of both plan sponsors and plan members.
When you de-risk through a group annuity, you transfer pension risk from your corporate balance sheet to a specialist, like Brookfield Annuity, a life insurance company that is completely focused on managing the risk – and meeting the obligation – of DB pension plans.