When defined benefit plan sponsors opt to freeze their plans but find that low interest rates and rollercoaster markets aren't healthy for long-term plan survival, are there other options?
Pulling the plug and actually shutting down the plan is a tangible choice, although it can be a precipitous endeavor.
The Principal Financial Group is attempting to make that difficult procedure somewhat more simple through both an informational white paper ("Winding Down Your Hard-Frozen Defined Benefit Plan") and its own set of services in managing and closing defined benefit plans.
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"Many plan sponsors are anxious to get their defined benefit plans off their books," said Janet Kubik, VP of retirement and investor services with the Principal. "But even if economic conditions rebound, shutting down a plan is time-consuming and complex.
Prinicipal's termination program focuses on all of the major issues related to the closure of a plan, from the execution of a Dynamic Asset Allocation Strategy to the final risk transfer, distributing the assets to end all obligations.
The first part of the white paper series offers best practices for developing a formalized exit strategy, while the second portion puts those plans in motion, right up to the final distribution of assets.
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