And now, the end is near
And so I face the final curtain
My friend, I’ll say it clear
I’ll state my case, of which I’m certain…
Mr. Frank Sinatra sang the above lyrics in the song “My Way”. The lyrics popped into my head this morning as I read an article from Pensions and Investments relating to a survey conducted by MetLife. The “2019 Pension and Risk Transfer Poll” revealed that 76% of corporate DB plans that have engaged in derisking activities intend to fully divest plan liabilities at some point down the road. The demise of the traditional DB pension system is moving full-steam ahead.
According to the P&I article, the “Poll” involved 102 corporate DB sponsors with derisking goals. Wayne Daniel, an SVP and Head of U.S. Pensions at MetLife was quoted as saying that “this is the strongest indication of how intentions of corporate plan sponsors have shifted”. Of the 67% of the sponsors considering a risk transfer strategy, more than three-quarters of them have evaluated the potential cost and nearly 60% have evaluated potential solutions available in the marketplace.
Mr. Daniel went on to say that “Managing a pension plan continues to be a distraction. It puts you in the pensions business…it distracts you from your core business.” That is unfortunate because DB pensions used to be a great retention tool for companies. Furthermore, it helped move employees through their work life-cycle, encouraging a transition to retirement in a dignified way. Clearly, this is no longer the focus.