The multi-million dollar opportunity for pension plan sponsors

Author: Sean Brennan, SVP, Head of Pension Risk Transfer, Athene

Until recently, the pension risk transfer (PRT) market was comprised mostly of small transactions mostly resulting from plan terminations. Insurer pricing deviations were often financially immaterial to plan sponsors. Today it is much more common for plan sponsors to explore or execute very large, discretionary PRT transactions; the total transaction volume in 2018 was $26 billion, up from just $4 billion in 2013.

Despite the sharp increase in transaction size, the transaction process itself is largely unchanged. The final “auction” date is picked months in advance and generally only changes due to process delays or significant changes in market conditions. Plan sponsors approaching PRT transactions this way may end up leaving substantial money on the table.

In this paper, we demonstrate how a transaction process that includes ongoing price monitoring can lead to more successful outcomes.