Communicating lump-sum windows

Lump-sum windows are common ways for defined benefit (DB) plan sponsors to shed pension liabilities. According to Milliman consultant David Benbow, effective communication is essential when employers consider offering of a lump-sum window. He offers his perspective in a recent Money Management Intelligence article. Here is an excerpt: Three things are necessary to make a […]

Is the “window” closing for lump-sum windows?

Offering lump-sum windows to terminated vested participants has financial pros and cons for defined benefit plan sponsors. The regulatory environment in 2016 presents sponsors with a unique opportunity to de-risk pensions through lump-sums. However, sponsors may miss an opportunity to capitalize on the financial advantages of offering lump-sums if they defer to later years. Milliman’s […]

Lump-sum windows: Too much information?

In January, the U.S. Government Accountability Office (GAO) issued the report “Participants need better information when offered lump sums that replace their lifetime benefits.” This is much easier said than done. There is so much information included in lump-sum kits that they typically run at least 25 pages. The Special Tax Notice alone takes up […]

Administration preparation for lump-sum cashout windows

Many plan sponsors have offered lump-sum cashout options to vested terminated participants (VTs) for a specified period of time, or window. While this strategy provides pension risk management opportunities, it is important to note that a large number of administrative tasks are necessary before offering such a window. Some of the key steps include: • […]

Administrative tips for lump-sum window offerings

Lump-sum windows can present a “win-win” scenario for both defined benefit (DB) pension plan sponsors and participants. Sponsors can decrease their PBGC premiums by reducing the amount of participants within a plan. On the other side, participants in need of cash can benefit from a lump-sum payout. Before implementing a lump-sum window sponsors must first […]

Is 2016 the year of lump-sum sweeps?

In her February Retirement Town Hall post, Stephanie Sent asked if 2015 would be the year of lump-sum sweeps. The answer appears to be “yes” for a number of defined benefit plan sponsors, as the de-risking of plans and the savings on per-head administrative costs and Pension Benefit Guaranty Corporation (PBGC) premiums are compelling. Many […]