Another product rollout is moving the needle in how sponsors manage defined benefit liabilities.

As companies consider various ways to derisk, turning to options that range from annuities to lump-sum buyouts, another option has entered the market with the Pension Risk Navigator from Buck Consultants at Xerox.

Sponsors of DB plans are already considering a range of derisking strategies, as pension liabilities grow with the addition of increased mortality assumptions, higher premiums for the Pension Benefit Guaranty Corp., and the drop last year in fund ratios.

The Mercer-CFO Research 2015 Risk Survey has found that nearly half of DB plan sponsors are considering one or another form of lump-sum payouts within the next year, and 60 percent of respondents to that survey indicated they’ve already executed some kind of lump-sum payout to vested employees.

Thirty-six percent said they’re considering a wholesale annuity buyout either this year or next.

Read: Lincoln Electric to derisk its pension plan with annuity

And Mercer itself came out with its own Pension Risk Exchange, which allows DB plan sponsors to upload specific info on their plans so that insurers can in turn provide quotes on annuity buyouts.

This latest entry from Buck Consultants “provides a new approach to monitoring by helping pension fund managers better seize market opportunities and reduce risk,” according to the firm. “Employers can now set, monitor and adjust the risk strategy for their retirement programs in real time, rather than waiting for monthly or quarterly updates.”

Pension Risk Navigator is a software tool that provides current information on funding and investment strategy to help manage both expenses and balance sheet volatility.

The tool analyzes proposed changes in contribution and investment strategies, assessing the effect of transferring plan liabilities, such as offering lump sums to certain plan participant groups and illustrates the impact of closing or freezing the pension plan.

Employers can also define goals and estimate the probability of meeting pension objectives.

Instant Insights /

Monitoring pension risk levels more closely now an option

More From HR Executive

Related Stories

Recommended For You