According to a recent survey by Mercer, more defined benefit plan (DBP) sponsors seek to de-risk due to volatile markets and uncertain costs. Mercer also reported that risking Pension Benefit Guaranty (PBGC) premiums have a significant impact on funding decisions. In a June 25, 2019 press release, Matt McDaniel, head of Mercer’s US Financial Strategy Group, was quoted as saying “Given the challenges of increased market volatility and uncertain costs plan sponsors face today, many are reevaluating how they want to achieve their long-term pension plan goals. We are seeing many sponsors take a critical look at their strategic roadmap, including the supporting policy actions and governance structures that will guide them into the future. There was an acceleration of such activity in the past two years, and plan sponsors expect continued evolution in the next few years.”
This same Mercer survey found that 70% of survery respondents were likely to transfer some or all of their retirees obligations to an insurance company through the purchase of an annuity in 2019 or 2020.