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October Three’s market-based pension designs offer an alternative route to lifetime income, combining the flexibility and risk profile of a 401(k) with the reliability of a traditional pension plan to deliver greater sustainability and security compared to a traditional pension.
Before 2023, the Client offered employees a traditional average pay Defined Benefit pension plan with a significant benefit. But, with a large volume of legacy employees, the plan became challenging to budget. The client sought alternatives that would deliver budgeting predictability to the organization and greater transparency to participants, without diminishing benefits.
However, the Client's existing administrator expressed that these goals could not be achieved within the current plan. Looking for alternatives, the Client turned to October Three to explore designs that could better meet the organization's objectives while protecting the value of its retirement benefits.
October Three worked with the Client to evaluate its existing pension plan and identify opportunities to improve cost predictability and participant value without significantly disrupting the existing benefit structure.
The process included:
Financial analysis: Reviewed financial forecasts, balance sheets, profit and loss statements, and other relevant information to evaluate how potential plan changes could affect the organization and its participants.
Plan redesign: Identified an opportunity to provide participants with more visible account-based benefits while reducing the financial volatility associated with the existing plan.
Iterative plan modeling: Developed multiple plan design options to address the Client's objectives, supported by projections illustrating how each option could affect the organization and key participant groups.
Throughout the process, October Three focused on preserving the value of benefits for legacy employees, creating value for the current workforce, and giving company leadership the information needed to evaluate the alternatives and make an informed decision.
October Three's final plan design was well received by the Client's leadership and employees, delivering improvements without reducing benefits.
Key outcomes included:
Improved benefit transparency: An account-based benefit structure, similar to a 401(k), gave participants greater visibility into their retirement benefits.
Greater cost predictability: The redesigned plan addressed the financial volatility associated with the previous arrangement, supporting the organization's budgeting objectives.
Continued employee value: The new design maintained benefits for current and legacy employees while creating a structure better aligned with the Client's goals.
A stronger long-term partnership: The successful redesign strengthened the Client's relationship with October Three and supported the integration of the new plan with the existing 401(k), allowing participants to access their benefits from one platform.
Combining the flexibility of a 401(k)s with the reliability of a Defined Benefit plan, O3 PRIME offers greater retirement savings than a Defined Contribution plan, and reduced financial volatility than a traditional pension. Discover if your organization could be a good fit for an O3 PRIME plan today.