2012 could be a big year for pension plan terminations, according to Vanguard Strategic Retirement Consulting. Many sponsors of frozen defined benefit plans are considering terminations because the Pension Protection Act of 2006 reduced regulatory stumbling blocks related to offering lump-sum payments.

If you are considering closing a DB plan, you must figure out a way to make the transition easier for employees. Vanguard recommends putting in place a  well-planned participant strategy that includes clear, timely communications; participant access to objective advice; and possible enhancements to your existing defined contribution plan.

If your plan already is frozen, its termination will have little financial impact on participants, but their concerns should be carefully considered. In addition to sending any required notices about the closure, you will want to tell participants why you are terminating the plan. Be clear about the financial or other implications for participants.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.