More companies are turning to annuity purchases as a way to accomplish pension risk transfer, according to a recent report by Prudential.
Prudential discovered the trend in its sixth annual survey that it conducted with CFO Research concerning what finance executives plan to do regarding the retirement and benefits programs their companies offer.
The trend is quite pronounced, the study says. They found that among respondents, 3% of companies transferred liabilities in 2010, but 15% did so five years later. Even more dramatic is the jump in the percentage that said they are very likely to shift their focus to annuities in the next two years: 5% said so in 2010, and 23% last year.
Silver Linings
Prudential discovered the trend in its sixth annual survey that it conducted with CFO Research concerning what finance executives plan to do regarding the retirement and benefits programs their companies offer.
The trend is quite pronounced, the study says. They found that among respondents, 3% of companies transferred liabilities in 2010, but 15% did so five years later. Even more dramatic is the jump in the percentage that said they are very likely to shift their focus to annuities in the next two years: 5% said so in 2010, and 23% last year.
Silver Linings
There are additional side benefits to the growing interest in risk transfer, the report says. For instance, 38% of respondents said that it could help them better focus on their core business. In addition, Prudential says, interest in risk transfer is motivating some employers to better fund their pension plans.
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