Just What Is Pension Risk Transfer?
Pension risk transfer is any action taken by a defined benefit plan (Plan) sponsor to reduce a plan sponsor’s exposure to its pension liabilities. Since 2012 one of the most common forms of pension risk transfer has been the purchase of a group annuity contract (also known as an annuity buy-out or annuity lift-out). Pension risk transfer through the purchase of a group annuity contract is of paramount concern to retirees, because all of the uniform protections intended by Congress under ERISA are lost and retirees become subject to non-uniform state laws.
Retirees for Justice advocates for state legislation that provides protections for retirees in pension risk transfer transactions through:
- full protections of retirees’ annuity benefits from creditors
- basic financial disclosures, and
- reasonable restrictions on subsequent transfers of pension de-risking annuities.
