Many Employers Plan to Curb Cost of PBGC Premiums

A growing number of employers plan to act this year to curb the cost of future Pension Benefit Guaranty Corporation premiums, according to Aon Hewitt. Not all of the employers the human resources firm recently surveyed have an open plan. In fact, a majority have a plan that is either frozen or closed to new employees. But what they do share is concern about higher PBGC premiums, and 66% plan to be ready for them.

The employers that expect higher premiums in the future plan a variety of responses in order to be prepared. These include:

• adjusting plan assets to better match liabilities;
• conduct an asset liability study;
• offering terminated vested participants a lump sum window;
• purchasing annuities for a portion of their plan participants;
• increasing cash contributions; and
• performing a mortality study.

 

In a press release, Aon Hewitt Global Retirement Solutions Leader Ari Jacobs, had another suggestion for employers regarding steps they could take: "Settlement strategies may be an appropriate approach for well-funded DB plans so that pension plan sponsors are able to honor the retirement benefits promised to participants, while also considering the long-term financial outlook of the plan."