Pension Risk Transfers Continue to Skyrocket in 2023

June 21, 2023

Your pension plan’s improved funding status is now face-to-face with market volatility, geopolitical uncertainty and hints of a recession. If you’ve been contemplating de-risking your defined benefit (DB) pension plan, the time may be right to develop a successful pension risk transfer strategy.

Successful Plan Termination Starts with Structured Approach

As 2022 wrapped up, market performance and interest rates improved the funded status of pension plans to levels not seen since the Great Recession (December 2007 to June 2009).




Halfway through 2023, however, market volatility and a potential economic downturn are continuing to push employers toward de-risking their pension plans. According to recent statistics provided by LIMRA, the first quarter of 2023 has generated a record-breaking $6.3 billion in pension risk transfers in the United States. This is 138% higher than buyout activity in Q1 of 2022 and a 15% increase in pension risk transfers including both buy-in and buy-out activity. As of late May, the average funded status in the U.S. remains the highest in 13 years providing employers with continues opportunities to de-risk.




With an eye on today’s economic situation, employers who had planned for a plan termination in recent years can take action now to de-risk their plans. Establishing a strategy and structured approach are critical to implementing a successful pension risk transfer – whether the plan termination is 1, 5 or 10 years away.

Plot Your Plan Termination Path with COMPASS

The plan termination process requires numerous steps, but there are also actions employers can take to better prepare for a plan termination. Exploring the plan’s investment strategy, understanding the benefits of de-risking and developing a formal contribution policy are key to determining your pension plan’s financial readiness for termination.

COMPASS, USI Consulting Group’s (USICG) proven pension plan termination solution, helps guide employers through a three-step process:

  1. Educate – USICG’s actuaries examine your pension plan’s status and adeptly educate you on the available de-risking options.
  2. Navigate – USICG’s pension plan termination team helps employers navigate the glidepath, compliance requirements and administrative complexities needed to terminate your plan. All filings and participant notices are executed by our team.
  3. Terminate – USICG’s annuity placement consultants guarantee that the safest insurer with the best value, in accordance with DOL IB-95-1, will be procured to administer the benefits of plan participants who do not elect lump sum distributions. With this final step, organizations can successfully terminate their pension plans.

Case Study: Plan Termination Turns Up Earth-Moving Savings

Recently, USICG was hired by a major hospital in the Midwest U.S. to execute a pension plan termination for a group of over 10,000 employees and nearly half-billion in assets. After careful funding and liability management, the organization reached a point where their pension plan was sufficiently funded for termination.

USICG brought a total team approach to this project, combining associates from our administrative, actuarial and human capital teams to provide a personalized experience. Following the Compass approach, USICG conducted a search and placed an annuity contract with a qualified insurer in compliance with current regulations saving the client millions of dollars.*

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*Actual results will vary. The use of any stated benefits in this case study is intended for illustrative purposes only and may not be used to predict or project future results.

Investment advice provided to the Plan by USI Advisors, Inc. Under certain arrangements, securities offered to the Plan through USI Securities, Inc. Member FINRA/SIPC. Both USI Advisors, Inc. and USI Securities, Inc. are affiliates of USI Consulting Group.

This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend that you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1023.S0620.0049