Just What Is Pension De-Risking?

Pension de-risking 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 de-risking has been the purchase of a group annuity contract (also known as an annuity buy-out or annuity lift-out). Pension de-risking 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 de-risking transactions through:

  • full protections of Retirees’ annuity benefits from creditors
  • basic financial disclosures, and
  • reasonable restrictions on subsequent transfers of pension de-risking annuities.