Annuities vs. Pensions: What Retirement Plan Advisors Should Know About ‘De-Risking’
December 23, 2020 by Ben Mattlin
Pension obligations are a major liability on many corporate balance sheets. Retirees are living longer than ever, sometimes claiming pension payments for decades. Advisors to pension plans may be called upon for suggestions of how to de-risk employer-sponsored benefit plans. Weighing available options is crucial.
One idea that’s gaining traction: annuities. In recent years, Lockheed Martin, FedEx, Raytheon, Alcoa and others have transferred billions of dollars worth of pension liabilities to insurance companies through group annuities — and others are likely to follow suit.
Wink’s Note: Matthew Gray‘s commentary in this piece is gold:
“In my view, the annuity guarantees are even stronger than those that safeguard pensions.” -sjm