Unlocking Savings in Pension Risk Transfer: Introducing Our New Tool to Analyze Your Plan's Financial Landscape
We are pleased to announce the launch of our PRT savings tool. It offers a detailed breakdown of the expenses involved in transferring your pension risk. By analyzing various factors, such as your plan's funding status, projected liabilities, and market conditions, we provide you with a clear understanding of the financial implications of transferring your pension obligations and how much you could save annually.
Every plan sponsor knows that managing a pension can be complex and costly. That's why we developed the Pension Risk Transfer (PRT) Savings Tool to show the potential savings and benefits associated with transferring pension risk. It offers a detailed breakdown of the expenses of shifting pension obligations, enabling users to make informed decisions about their retirement plans.
What the tool analyzes
The tool provides a detailed analysis for your pension plan. Here’s what you’ll see:
Plan funding status: Shows the current funding level of the pension plan — the ratio of the plan's assets to its liabilities. If the plan is well-funded, the cost of transferring the risk might be lower than for an underfunded plan.
Projected liabilities: Uses actuarial calculations to estimate the future pension obligations the employer will need to meet. This projection is crucial in determining the potential savings from a PRT transaction.
Market conditions: Considers prevailing market conditions, including interest rates and investment returns. These factors can significantly impact the cost of a PRT transaction.
Why should you use the tool?
Cost savings: The tool calculates the potential annual savings by comparing the ongoing costs of managing the pension plan in-house versus the expenses associated with PRT.
Financial viability: Based on the provided data, it evaluates the feasibility of a PRT transaction. It may highlight cases where a transfer might be cost-effective and instances where it may not be in the best interest of the company or plan participants.
Decision-making support: Armed with the comprehensive analysis, users can make informed decisions about the best course of action for their pension plan. It empowers them to choose the most appropriate risk management strategy based on their financial goals and risk tolerance.
Risk mitigation: It can help employers reduce the financial risks associated with managing a pension plan, which often includes potential market fluctuations and longevity risk (the risk of plan participants living longer than anticipated).
User-friendly interface: The tool is designed to be user-friendly, making it easy for individuals and companies to navigate through the process. Users are asked to enter their Employee Identification Number (EIN) and plan number, or they have the option to look up their company by name — making the process simple and hassle free.
What to Read Next
The third and fourth quarter are in full gear as slots are filling up and insurers are reaching capacity constraints. Plan Sponsors who would like to transact this year should connect with an annuity search firm immediately to achieve their de-risking goals.