Reducing Pension Risk: The Five Myths Holding Back Plan Sponsors
This paper demonstrates that conventional wisdom about de-risking DB plans is often false. Invalidating the "five myths" can help broaden the range of options that DB plan sponsors are willing to evaluate when formulating their long-term pension strategies.
Despite an increasing interest in and awareness of risk management alternatives, the market has yet to see more large companies implement de-risking, and in particular, risk transfer solutions. Several plan sponsors are currently evaluating their de-risking options, yet a gap clearly exists between the intentions and actions of some companies with respect to DB risk reduction. Contributing to this gap are five marketplace misconceptions, or “myths,” which forestall plan sponsors from taking action. Disproving the "five myths" can help expand the range of risk reduction measures that DB plan sponsors are willing to evaluate and implement.