More than three quarters of plan sponsors with de-risking goals intend to completely divestMetlife publishes its 2019 Pension Risk Transfer Poll.
January 24, 2019 — NEW YORK–(BUSINESS WIRE)–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.”
The MetLife 2019 Pension Risk Transfer Poll surveyed 102 defined benefit (DB) plan sponsors in order to:
- Probe on voluntary contributions made to improve a plan’s funded status;
- Assess the likelihood they would engage in PRT to achieve their plans’ de-risking goals;
- Determine what specific PRT activities they were most likely to use and for which participant population(s);
- Understand the current catalysts driving interest in PRT to an insurance company;
- Identify the most important drivers when selecting an insurer for a PRT; and,
- Determine how quickly companies plan to completely divest themselves of their DB plans.
The Poll was fielded between August 13, 2018 and September 27, 2018. MetLife commissioned MMR Research Associates, Inc. to conduct the online survey in cooperation with Strategic Insight, which owns PLANSPONSOR and CIO magazines.
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 to 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.
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.
About the Poll
The MetLife 2019 Pension Risk Transfer Poll was fielded between August 13, 2018 and September 27, 2018. MetLife commissioned MMR Research Associates, Inc. to conduct the online survey in cooperation with Strategic Insight, which owns PLANSPONSOR and CIO magazines. Survey responses were received from 102 defined benefit (DB) plan sponsors with de-risking goals. This included 52% of plan sponsors who reported DB plan assets of $500 million or more, and 48% with DB plans that are at least 90% funded (including 21% that are fully funded). The full report examining these findings is available at: www.metlife.com/prtpoll2019.
MetLife, Inc. (NYSE:MET), through its subsidiaries and affiliates (“MetLife”), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help its individual and institutional customers navigate their changing world. Founded in 1868, MetLife has operations in more than 40 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.