Many US pension plans typically opt for one of two de-risking methods: either hibernation – creating a low risk liability driven investment portfolio, or termination – removing all risk through a combination of retiree annuity buyouts and bulk lump sum offerings to terminated vested participants. However, as even those opting for hibernation will have to transfer the residual liabilities at some point, it is therefore not a question of if a pension plan should transfer but when. The best approach therefore doesn’t focus on one strategy over the other but applies the right one at the right time.
In a commentary article for Pensions and Investments, Matthew Seymour, CEO of RiskFirst, discusses the importance of a flexible de-risking strategy for pension plans and how it is effective navigation that ensures the best de-risking strategies can be implemented.
To read the full article, please click here (please note, this article lies behind a paywall).