Sibson Spotlight: The Decision to Terminate a “Frozen” Defined Benefit Plan

NEW YORK--(BUSINESS WIRE)--According to Stewart Lawrence, SVP and Sibson’s National Retirement Practice Leader, “Terminating a DB plan is simply one of the de-risking options open to plan sponsors. It is, of course, a strategy with advantages and disadvantages. We think plan sponsors need to carefully consider whether to terminate a frozen plan or to pursue other de-risking and end-game strategies by taking into account such factors as costs, interest in ‘taking risk off the table,’ opportunity costs and investment considerations.”

A new issue of Sibson’s e-publication, Spotlight, presents an overview of what terminating a “frozen” defined benefit (DB) plan entails. It addresses the procedural, administrative and broad financial aspects to be considered when contemplating termination of a DB plan. It also emphasizes the importance of planning for the termination and timing it to maximize the financial benefit for the plan sponsor.

Spotlight is available on the Sibson website as a printer-friendly PDF: http://www.sibson.com/publications/spotlight/jan2013term.pdf.

This issue of Spotlight is part of a series of Sibson publications related to “de-risking” pension plans. Subsequent publications will discuss two other important issues associated with DB plan terminations: investment considerations and what to consider when selecting an insurance company to provide annuities.

Sibson Consulting (www.sibson.com), a Division of Segal, provides strategic HR solutions related to the planning, implementation and operation of total rewards, compensation, retirement and health benefit programs. Sibson's services encompass talent management, benefits, organization design, sales effectiveness, change management and HR technology.