Defined benefit (DB) pension plans offer a number of advantages over other types of retirement savings programs, especially in terms of providing retirement security for employees. But DB plans also require complexities and related costs that many plan sponsors today find difficult to maintain. Even freezing or closing the plan is not easy.
There are strategic actions that can lower costs today and smooth planned transitions tomorrow.The basic concept is this:
Sibson Consulting refers to this process as the Journey.
Being prepared to take appropriate actions at the most opportune time is crucial to minimizing risk and controlling costs. These actions include:
Performing Data Maintenance to verify all plan data’s accuracy to ensure sound decisions moving forward
Reviewing Plan Design to align retirement benefits with the overall employee value proposition and reviewing plan design modification options
Considering revised Asset Strategies to manage investment policy, performance, and risk against market volatility
Modeling a Partial Risk Transfer to help reduce costs and risks associated with vested terminated participants
Planning for a possible Plan Termination to determine the optimal time to move remaining participants into annuities
Sibson’s approach starts with an initial review and assessment of a DB plan’s current circumstances to identify its location on the Journey. We then engage with you to determine the preferred end-point and to develop an action plan towards that destination with specific measurements for success along the way.
To learn more about Sibson’s approach to Journey Consulting for DB pension plans;
Company leaders wanted to curb costs by changing the plan’s benefit formula while making sure not to undermine their mission to serve their employees with valued benefits. Unfortunately, data issues within the plan threatened to offset impending savings.
With an acquisition pending, a healthcare organization found that prior mergers had led to inaccurate pension data that was raising the costs of closing the plans and potentially delaying the acquisition. Resolving the issues led to two streams of cost savings.
In an effort to save costs and improve benefits coordination between multiple locations, one company decided to consolidate its benefits administration. In doing so, it became highly evident that in order to enhance the administrative staff’s performance and productivity, there was a need for both significant data cleanup and an updated pension software system.
An organization with an employee defined benefit pension plan realized its annual PBGC premium costs were increasing at an exponential rate and sought a solution to stem the tide.
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