Risk Transfers Affected More than 1 Million, PBGC Says

Risk transfer events (RTEs) affected more than one million pension plan participants during the period 2009-2013, reports the Pension Benefit Guaranty Corporation (PBGC). In “Risk Transfer Study: Plan Years: 2009-2013,” PBGC actuaries looked at patterns in the data 3,600 large pension plans reported on Forms 5500 during that period in order to identify companies that had recent risk transfers.

The PBGC is interested in RTEs because:

• Lower insurance premium payments may affect PBGC's long-term financial condition.

• Past risk transfer activity can help project future activity and help PBGC plan for its effects.

• Participants may elect to receive lump sums. If so, policy makers will want to ensure they have the correct tools to manage their funds wisely.

More than 500 of those plans had RTEs during the period; more than 1 million participants left the plans as a result of them. Almost 400 of the RTEs involved lump sum payments; the rest involved annuity purchases to replace the company pension.

The study concludes that the neither a plan’s financial condition, nor union status, determined risk transfer activity.