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The 2025 NAPA 401(k) Summit in Las Vegas offered a broad, forward-looking agenda covering the full spectrum of retirement plan design, policy, and innovation. From SECURE 2.0 implementation strategies to evolving participant communication trends, attendees left with actionable insights to shape the future of retirement readiness. But for those focused on managing the legacy risk and obligations of defined benefit (DB) plans, one session in particular stood out: a deep dive into the current state of pension risk transfer (PRT) and plan terminations. October Three was there to capture the key takeaways—data-rich trends, plan sponsor considerations, and where the advisor opportunity lies next.
The Defined Benefit Footprint Continues to Shrink
The numbers tell a striking story: in just two years, the total assets in U.S. DB plans have dropped from $2.8 trillion to $2.2 trillion. This dramatic decline is largely attributed to consistent activity in annuity purchases (averaging $50 billion per year) and more than 1,600 standard plan terminations annually over the past five years. These actions are fundamentally reshaping the DB landscape and presenting significant opportunities—and challenges—for plan sponsors and advisors.
While the overall footprint shrinks, a surprising statistic came from the PRT session: more than 15% of defined contribution (DC) plan sponsors still maintain a DB plan. Many of these legacy plans are either hard frozen or nearing full funding, making them prime candidates for risk transfer.
Surging PRT Activity: What’s Driving It?
In 2024, PRT sales surpassed $51 billion, continuing an upward trend that shows no signs of slowing. What’s fueling this growth?
Improved funded status: As of March 2025, the average DB plan is now 107.1% funded on a projected benefit obligation (PBO) basis.
Higher interest rates: Rising rates have reduced liability values, making de-risking more affordable.
Insurer capacity and competition: Increased appetite from insurers has improved pricing and execution.
Escalating PBGC premiums: With the 2025 flat-rate premium now at $106 per participant, and the variable-rate cap increasing to $717, many sponsors see these costs as nothing more than a "tax" on continuing their DB plans.
Annuity Pricing: Plan Terminations vs. Retiree Lift-Outs
For plan sponsors considering a PRT strategy, understanding pricing dynamics is crucial:
Retiree lift-out transactions are being executed at about 96.5% of PBO, offering immediate relief from PBGC premiums and longevity risk.
Full plan terminations average about 100.7% of PBO, slightly more expensive but offering total removal of long-term liabilities.
This pricing differential continues to drive the strategy discussion: some sponsors are opting for phased de-risking (retiree lift-outs first), while others are pursuing full plan terminations when funding permits.
Who’s Left in the DB Universe?
According to recent data shared during the session, there are approximately 11,605 private, PBGC-covered single-employer DB plans—the majority of which are fully funded, hard frozen, and composed of more than 50% retirees. These plans make up the lion’s share of PRT activity since 2012. However, there are also more than 8,000 active plans still accruing benefits, representing untapped de-risking potential for sponsors and advisors.
Legal Headwinds: Jumbo Plan Lawsuits
One area of concern that surfaced at the Summit is the growing number of legal challenges to PRT strategies. Currently, roughly a dozen PRT-related lawsuits are moving through the courts, all involving large (jumbo) pension plans—most valued at over $1 billion. These lawsuits, all brought by Schlichter Bogard LLP, underscore the need for careful execution, robust fiduciary processes, and transparency in the selection of annuity providers.
The Advisor Opportunity
Amid these complex dynamics, advisors have a clear role to play. As the “Advisor Opportunity” session emphasized, the continued decline in DB plan assets, increasing terminations, and steady PRT activity create an environment where strategic guidance is not only valuable—it’s essential. Advisors can assist plan sponsors in navigating:
Plan funding strategies
De-risking timelines
Fiduciary best practices
Vendor selection
Participant communication during and after PRT
With $2.2 trillion still in play and over 8,000 DB plans actively accruing benefits, the field is wide open for advisors to lead.
Final Thoughts
The 2025 NAPA 401(k) Summit made one thing clear: pension risk transfer is no longer a niche topic—it’s a central theme in the retirement planning conversation. Between rising costs, legal scrutiny, and growing insurer interest, both plan sponsors and advisors must be proactive in evaluating de-risking strategies.
Whether you're advising clients on timing, funding, or vendor selection, the opportunities—and responsibilities—are greater than ever. The DB landscape is shifting rapidly, and those who stay informed will lead the way forward.