Solutions Start Here
Improved capital markets, higher interest rates and funded status increases are opening new doors for some sponsors. While each organization’s needs
are unique, the benefits of preparation and planning are universal.
Start by asking the following questions:
Does my organization have a
journey plan? If not, should we
take steps to develop one?
Should we reexamine our
Should we reconsider our asset
Have we modeled lump sum
settlements and annuity
Want to learn more? Contact your local Towers Watson consultant, or visit towerswatson.com.
Source: Towers Watson/Institutional Investor 2013 U.S. Pension Risk Management Survey. References to funded status estimates are as of 12/31/13, and are based on the
418 Fortune 1000 companies that sponsor U.S. tax-qualified defined benefit pension plans and have a December fiscal-year-end date.
Many Plan Sponsors Are Already Taking Action
Plan sponsors are engaging in an unprecedented amount of settlement activities.
Investment strategies focused on movements in asset values mirroring movements in
liabilities are becoming more prevalent.
7in 10companies expect to have implemented a liability-driven
investment strategy by 2015.
More senior finance executives
report they are using a journey plan
or de-risking road map to manage
pension risk. DB sponsors still prioritize
managing risk over gaining returns and
concerns about the bottom line are
driving decision making.
51%of sponsors report that
the impact of the DB plan on
financial statements is the basis for
determining funding policy.
Pension De-Risking: It’s Time to
Rethink Your Options
Improved Funding Environment Presents
At the end of last year, the funded status of corporate pension plans had
the highest annual increase in more than 15 years,
due largely to the strong stock market and higher interest rates.
2013 plan funding estimates jumped to the highest levels since
before the 2008 financial crisis.
Aggregate funding levels
The improved funding levels offer DB plan sponsors opportunities to reduce
pension risk. But more Pension Benefit Guaranty Corporation (PBGC) premium
increases are on the way. The time to act is now.
of sponsors have offered or
expect to offer lump sums.
of sponsors plan to settle
some or all liabilities
in the future.