MOST PLAN SPONSORS WITH DE-RISKING GOALS INTEND TO DIVEST ALL OF THEIR COMPANY\u0027S PENSION LIABILITIES IN THE FUTURE, METLIFE POLL FINDS

MOST PLAN SPONSORS WITH DE-RISKING GOALS INTEND TO DIVEST ALL OF THEIR COMPANYS PENSION LIABILITIES IN THE FUTURE, METLIFE POLL FINDS NEW YORK, January 24, 2019 2018 was another robust year for pension risk transfer (PRT), and new poll results from MetLife indicate that plan sponsors' interest will continue to grow in the near future. MetLife's new 2019 Pension Risk Transfer Poll, released today, found that more than three quarters (76%) of defined benefit (DB) plan sponsors with de-risking goals intend to completely divest all of their company's DB plan liabilities at some point in the future, with 33% intending to do so in the next five years.

The Poll findings indicate a trend in increased pension risk transfer activity as we anticipate plan sponsors will want to proactively deal with the cost and volatility of their plans, says Wayne Daniel, senior vice president and head of U.S. Pensions at MetLife. As a result, many will begin to look more closely at the $3 trillion of DB plan liabilities that have not yet been de-risked and begin to evaluate how they can address this.

Preparing to Act

Many plan sponsors have already taken steps to prepare for de-risking. For the 67% of plan sponsors considering a risk transfer within the next two years, the Poll found that 77% have evaluated the financial impact of a pension risk transfer, 74% have held discussions with key stakeholders, 65% have engaged in data review and cleanup, and 59% have explored the solutions available in the marketplace and/or quantified the cost of a pension risk transfer.

Plan Sponsors Keen on Annuity Buyouts

A majority of plan sponsors surveyed (79%) are more likely to consider an annuity buyout now that there have been several large, well-publicized instances of major corporations entering into annuity buyout deals with insurers. Annuity buyouts continue grow in popularity, with two thirds of plan sponsors (67%) saying they will use these solutions to de-risk, an increase from 57% in MetLife's 2017 Poll results, and up 21 percentage points since MetLife's first Pension Risk Transfer Poll in 2015.

Structuring Buyouts

The Poll found that the majority of plan sponsors intend to tranche transactions by participant population: the most common is retirees, with 54% of plan sponsors looking at this group, followed by terminated-vested participants at 43%. Only one in three (30%) say they would secure a buyout for all participants.

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