Majority of Plan Sponsors With De-Risking Goals Looking to Completely Divest Their Company’s Pension Liabilities in the Near Future, New MetLife Poll Finds
03 Outubro 2023 - 10:00AM
Business Wire
As the U.S. pension risk transfer market continues to break
records, findings from MetLife’s 2023 Pension Risk Transfer Poll,
released today, indicate that momentum will continue in the coming
years. Nine in ten companies (89%) plan to completely divest all of
their defined benefit (DB) pension plan liabilities and, among
those plan sponsors who intend to fully divest their liabilities,
they are likely to do so in an average of 4.1 years.
“The current environment is favorable for derisking and, if
these conditions persist, we anticipate continued growth in the
market,” says Elizabeth Walsh, vice president, U.S. Pensions,
MetLife. “Inflation and rising interest rates continue to be
catalysts for plan sponsors to derisk, which is a major shift from
the catalysts cited in our inaugural 2015 poll, when plan sponsors
reported that Pension Benefit Guaranty Corporation (PBGC) premium
increases and the impact of then-new Society of Actuaries’
mortality tables were driving activity.”
The 2023 Poll found that macroeconomic concerns are the primary
catalysts for initiating a pension risk transfer to an insurer.
These include inflation (49%), market volatility (42%), rising
interest rates (42%) and recessionary concerns (31%). Other
catalysts include an increase in their volume of retirees (42%) and
favorable annuity buyout market pricing (35%).
Taking Action According to the Poll, plan sponsors are taking
concrete, proactive steps to prepare for potential future
transactions. A majority of plan sponsors, 94%, report that their
company is weighing their DB plan’s value against the cost of the
benefit. Ninety-one percent of plan sponsors say the company’s DB
plan is receiving significant attention from corporate
management.
In addition to assessing the value of the benefit, over the past
two years plan sponsors have also taken practical steps to ready
their plan for derisking. These steps include improving their
plan’s data quality (58%), increasing plan contributions (56%),
having their C-suite executives more involved in DB plan management
(37%), and offering a lump sum distribution to terminated-vested
participants (24%).
Planned PRT Activity When they are ready to transact, the Poll
found almost 58% of plan sponsors will use an annuity buyout,
either on its own or in combination with a lump sum. Only 18% will
use an annuity buy-in. Among those seeking an annuity buyout, about
half of plan sponsors (49%) will do a buyout through a retiree
lift-out, while only 21% of plan sponsors say it is due to plan
termination activity.
Paths to Derisking According to the Poll, more than
three-quarters of plan sponsors, 77%, are aware that they have the
ability to split a single annuity buyout transaction with more than
one insurer and, if the transaction were sizable enough, a
majority, 88%, say they would split their transaction.
“Split deals make sense for very large and complex transactions
and we are likely to see more interest in these types of deals
moving forward,” says Walsh. “The Poll found that the average size
annuity buyout transaction would need to be above $400 million for
plan sponsors to consider splitting it.”
When asked about how they would approach their derisking
activity, more than half of plan sponsors surveyed plan to transfer
risk through a series of annuity buyout transactions (55%) versus a
single annuity buyout transaction (45%).
About the Study The MetLife 2023 Pension Risk Transfer
Poll was fielded between July 5 and July 27, 2023. MetLife
commissioned MMR Research Associates, Inc. to conduct the online
survey. Survey responses were received from 250 DB plan sponsors
with $100 million or more in plan assets who have de-risking goals.
This included 41% of plan sponsors who reported DB plan assets of
$500 million or more. To read the full MetLife 2023 Pension Risk
Transfer Poll report, visit http://www.metlife.com/2023prtpoll.
About MetLife MetLife, Inc. (NYSE: MET), through its
subsidiaries and affiliates (“MetLife”), is one of the world’s
leading financial services companies, providing insurance,
annuities, employee benefits and asset management to help its
individual and institutional customers build a more confident
future. Founded in 1868, MetLife has operations in more than 40
markets globally and holds leading positions in the United States,
Japan, Latin America, Asia, Europe and the Middle East. For more
information, visit www.metlife.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20231003601929/en/
MetLife: Judi Mahaney jmahaney@metlife.com 212-578-7977
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