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Many companies including International Paper and FedEx, says the Wall Street Journal’s – CFO Journal, are taking advantage of the unique factors making now an ideal time to annuitize. Transferring plan liabilities to insurance companies through an annuity purchase is an effective way to decrease risk and reduce costs, and today’s market is an especially advantageous climate for the annuity-seeker.
According to research from Goldman Sachs Asset Management, rising interest rates and new tax laws have placed pensions in the United States at their highest level of funding since the financial crisis. When plan funding is high, the time is right for sponsors to reduce risk through transferring plan liabilities. The closer to fully-funded a plan is, the better the deal sponsors will receive when making an annuity purchase.
PBGC premiums are continually on the rise. Because the amount you pay depends upon a plan’s headcount, reducing headcounts by transferring participants to an insurer ultimately leads to lowering your PBGC premium costs.
Simply put: a transfer of liabilities through annuity purchase leads to reduction in plan size, which means a decrease in overall liability and lowered plan risk.
Plan administration fees can be costly, and a greater number of participants means a larger investment in plan administration overall. In addition to saving on PBGC premiums and reducing liability, annuitizing can also mean significant savings on plan administration charges.
We are currently in the longest running bull market in history. Given recent investment volatility, now may be a good time to lock in positive investment gains for your plan.
Annuitizing leads to lower risks, lower costs, and lower demands on resources– and now is a great time to get started. Discover what to look for when selecting an annuity provider, and contact us to learn more.