Does your defined benefit plan have a lump sum option?
Nearly forty percent of U.S. employers who sponsor defined benefit
pension plans are at least "somewhat likely" to offer
lump sums to retirees and vested terminated participants in 2013,
according to an Aon Hewitt survey released earlier this month.
It is safe to say that an even larger group of defined benefit plan
sponsors is considering whether to offer lump sums after hearing
about the lump sum offers implemented by General Motors and Ford
last year.
The attraction of these lump sum payouts is that once these
participants have been cashed out, they will no longer be an
obligation of the plan. Therefore, the consideration of lump sum
elections for terminated participants is part of the larger trend
of de-risking pensions and reducing balance sheet liabilities.
