De-risking DC plans
Discussions about pension plan de-risking tend to focus on minimizing—or at least managing—financial risk for DB pension plan sponsors. Across the spectrum of pension risk management strategies, plan sponsors often consider a DC plan to be a low-risk, or no-risk, solution, particularly if they previously provided a DB plan. In fact, when DB plan sponsors talk of de-risking, that is often “code” for converting their plan to a DC arrangement. DC plans certainly mitigate plan sponsor financial risk: there is little danger of having to make higher sponsor contributions to account for market volatility or increased longevity, as is possible in the case of a DB plan.
- December 23, 2014 September 13, 2019
- 10:21