Market volatility and economic uncertainty are driving U.S. plan sponsors to reduce pension risk. A record 94% of defined benefit pension plan sponsors with derisking goals intend to fully divest their pension liabilities, with 80% planning to do so within five years, MetLife’s 2025 Pension Risk Transfer Poll found.
“We’re seeing a new era of strategic pension stewardship,” said Elizabeth Walsh, vice president and head of U.S. Pensions at MetLife. “Plan sponsors are taking action, leveraging flexible deal structures and favorable market conditions to deliver long-term security for their participants.”
Macroeconomic uncertainty is having a clear effect. Ninety-four percent of plan sponsors report that their pension plans are receiving significant attention from corporate management because of the financial impact of volatility on their balance sheets. Plan sponsors say market volatility is the top catalyst for pension risk transfer (45%), followed by interest rate changes (41%).
MetLife’s inaugural research in 2015 highlighted pension risk transfer as a niche solution, largely reserved for the largest plans and a handful of insurers, with annual transaction volumes under $14 billion, according to LIMRA. Today, the market has grown dramatically, with nearly $52 billion in 2024, and volumes are projected to reach $100 billion by 2030.
Split deals and reinsurance strategies are expanding capacity and diversifying risk. And, with more than 20 active insurers -- twice as many as a decade ago -- competition is driving better pricing and more flexible deal structures.
“Today, plan sponsors are more knowledgeable and strategic about pension risk transfer solutions, a notable shift from 2015," Walsh said. "A decade ago, organizations were more cautious, mainly exploring financial impacts and available options."
Among other findings.
- Over the past 10 years, plan sponsors have shifted from exploring risk transfer options to taking concrete steps toward readiness.
- Data cleansing has emerged as the top preparatory action, with 62% prioritizing the improvement of plan participant data quality.
- Nearly half have increased plan contributions.
- In 2015, only 46% of respondents said they would use an annuity buyout on its own or in combination with a lump sum to achieve their goals. Today, that figure has soared to 78%.
- The average size of the liabilities surveyed sponsors plan to transfer is $608 million.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.