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Restructuring Legacy Pension Liabilities in the Age of Historically Low Interest Rates

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Waiting for rates to rise?
The efficacy and timing of de-risking moves often comes down to where you think interest rates are going. Perhaps we should stop thinking they will head appreciably higher anytime soon. Negative real yields are apparently the norm. ​

Interest rates have continued trending downwards for years.

Rationale for Retiree Lift-outs in the age of historically low interest rates. 10 reasons to consider:
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1. Lower rates have expanded pension liabilities on plan sponsor balance sheets and increased PBCG costs.
2. Many plan sponsors have access to cash to retire portions of their liabilities.
3. Negative Real Yields are increasing risk in DB plans as investment managers chase yields.
4. Risks are more apparent than ever as black swan events are ever-present, though rarely accounted for in advance.
5. March 2020 and its aftermath of massive fiscal injections and Federal Reserve actions mean an economy and markets built on mountains of debt with unknown consequences, e.g., risk.
6. With rates so low, it is a great time to “Re Fi” portions of pension debt.
7. Retirees can have options while reducing the costs of de-disking by offering lump sum elections.
8. Often overlooked, but easily dealt with, companies can remove legacy pension obligations once and for all.
9. Legacy liabilities offer little but risk. They are frozen and no one is accruing additional benefits.
10. A hungry carrier environment means tightly priced annuities when compared to retiree GAAP liabilities.

Pennies on the dollar can reduce pension risk transfer costs after PBGC cost savings are taken into account.

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Raymond James’s PRT Group and CESCREWS
The Raymond James Pension Risk Transfer (PRT) Group brings a national presence with highly experienced advisers in your area. CES-CREWS systems and consultants bring what’s needed to complement these advisers and provide proactive results to plan sponsors. For more information contact:

For more download our brochure: Restructuring Legacy Pension Liabilities in the Age of Historically Low Interest Rates

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​Contact Us:

Florida
Craig Johnson, ChFC®                                                        Dusty Johnson, CFP®, AIF®
Craig.Johnson@RaymondJames.com               Dusty.Johnson@RaymondJames.com
2031 US Highway 27 South, Sebring, FL 33870
(888) 520-7526 / Website

NYC Metro
Joe Bartumioli
Joe.Bart@RaymondJames.com
135 Crossways Park Drive, Woodbury NY 11797
(516) 364-7489 / Website

Louisville
Russell Cotton
Russell.Cotton@RaymondJames.com
400 W. Market Street, Suite 2100, Louisville, KY 40202
(502) 569-4116 / Website