Defined Benefit Plans
Comprehensive advice for whatever stage your plan is at—active, frozen, terminating
You face a myriad of challenges as the administrator of your company’s defined benefit plan— funding liabilities, shifting regulations, escalating costs, and longer life expectancies just to name a few. Addressing these challenges is essential for minimizing the impact on your company’s financials.
Our retirement plan advisors understand the intricacies of managing active, frozen and terminating plans and work closely with you to develop a course of action to mitigate risk, reduce costs and drive better results.
Maintaining, freezing, or terminating a defined benefit plan can be a costly, time-consuming and overwhelming process. Let us take some of the burden off your shoulders.
Many plan sponsors significantly underestimate the plan’s asset liability risk. We look at all the components of your pension plan both individually and collectively, offering integrated solutions that address your current and future needs while mitigating risk.
Do you want to maintain your pension plan? Transfer liabilities to participants or insurance companies? Reduce your funding shortfall? Before providing any recommendations, we take time to understand your goals and evaluate the current state of the plan. From there, we work with you to develop and execute the best solutions for your situation.
A properly diversified portfolio is critical for meeting long-term benefit and funding obligations. We help you create an Investment Policy Statement (IPS) that provides a road map for your investment decisions. Your IPS outlines your organization’s goals, target asset allocation, investment preferences, restrictions and more.
Our support doesn’t end with the IPS. We also help you implement your policy through portfolio optimization, glidepath management, liability-driven investing, portfolio rebalancing and liquidity management. The goal is to help ensure the interest-rate hedge ratio and level of equity exposure of your portfolio align with your goals, market conditions and risk profile.
Should you offer lump-sum payouts? Deferred vested benefits? Does an annuity buyout make more sense? Should you pursue liability-driven investing? We help you weigh the pros, cons and potential impact of each option, so your plan committee can make sound decisions.
Longer life expectancies mean longer benefit periods for your former participants and higher costs for your plan. Underfunding can also increase costs in the form of larger PBGC premiums. We help you analyze your current funding ratio and mortality assumptions, and provide solutions for managing your funding liabilities more effectively.
The decision to terminate your defined benefit plan requires careful consideration—how will terminating affect your company, current participants and former employees? Plus, there’s a specific process you have to follow based on IRS and PBGC rules. We’re with you at every phase to make the termination smooth and seamless for everyone involved.
Given the complexity of defined benefit plans, many employers outsource plan functions to a third party. We conduct RFPs, benchmark fee structures, and evaluate the value of the services being provided to help you select the best providers for your plan.
We work with open, closed, and frozen pension plans of all sizes and complexity. Even if your plan is fully funded and on its way to being terminated, there are many chances for missteps that can cost time and money, if you don’t understand all your options.
Constantine Mulligan, CFA
Partner
Qualified retirement plans are a maze of regulations, investments and financial calculations. You need an advisor who has the expertise in all three and will use this expertise to help you deliver maximum value to your participants and your bottom line. That’s Cerity Partners.
Defined Benefit Consulting is just one way Cerity Partners helps HR teams deliver better outcomes. See how all our services work together to maximize value, minimize fiduciary risk and ease your administrative responsibilities.