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Variable Annuity plans

May 2022 Pension Finance Update

Financial markets continued to roil in May, but the net impact on pension finance was modest. Both model plans1 we track were close to even on the month. Through the first five months of 2022, Plan A remains up 4%-5% while the more conservative Plan B is holding at even on the year: Assets Stocks…Read More

April 2022 Pension Finance Update

Stock markets tumbled in April, but sharply higher interest rates offset most or all of the impact for pension sponsors. Our two model plans1 saw mixed experience on the month, with Plan A treading water, remaining up almost 5% for the year, while the more conservative Plan B lost 1% last month and is now even through the first four months of 2022:

Annuity Purchase Update: May 2021 Interest Rates

Despite the persistence of the pandemic, it is clear that the outlook for plan sponsors is currently trending positively. Equity markets are strong and interest rates are rising. This is leading to improved plan funding statuses and lower annuity purchase prices.

Annuity Purchases for Small-Benefit Retirees – Guaranteed Savings

Overhead costs have skyrocketed for sponsors of traditional defined benefit plans. The main component of the skyrocketing cost is the insurance premiums paid to the Pension Benefit Guarantee Corporation (PBGC). The PBGC premiums are a combination of a fixed per participant fee and a variable rate based on the amount unfunded but capped at a per participant maximum. These components have grown greater than 200% for the fixed and 500% for variable rate since 2012.

Variable annuity designs: promise and pitfalls

While corporate America continues to move away from defined benefit (DB) plans, these designs have enjoyed a sharp uptick in popularity in some market segments in recent years. The trend is due in part to enabling legislation (the Pension Protection Act (PPA), enacted in 2006), which has sparked a wave of innovative plan design solutions….Read More