Almost two-thirds of employers plan to take actions this year to limit rising Pension Benefit Guaranty Corp. premiums, mostly electing settlement strategies, said a new survey from Aon Hewitt.
The survey findings revealed:
- 22% of employers are very likely to offer terminated vested participants a lump-sum window in 2015;
- 19% of employers plan to increase cash contributions to raise funding levels in order to reduce future PBGC premiums; and
- 21% of employers are considering purchasing annuities for a portion of their plan participants.
In addition, the survey found, “31% of employers are very likely to adjust plan assets to better match liabilities in 2015,” a statement about the survey said.
Aon Hewitt surveyed 183 mostly large corporate defined benefit plan sponsors this past late fall and early this winter.
“A growing number of plan sponsors anticipate increasing pension plan costs due to recent changes to the Society of Actuaries longevity models and rising PBGC premiums,” Ari Jacobs, global retirement solutions leader, Aon Hewitt, said in the statement. “Settlement strategies may be an appropriate approach for well-funded DB plans so that pension plan sponsors are able to honor the retirement benefits promised to participants, while also considering the long-term financial outlook of the plan.”
Rob Austin, director of retirement research, Aon Hewitt, said in the statement, “Pension plan sponsors are planning ahead and are taking actions now to better position themselves to manage volatility in their pension plans no matter what the future economic environment brings.”