Feel free to peruse our blog or search for posts based on a specific term.

April 1, 2014

5 Strategies to Consider Before Terminating Your Defined Benefit Plan

A Defined Benefit Plan can pose a serious risk to an organization’s financial profile, especially in volatile markets with low interest rates. There are multiple de-risking strategies that can be employed to decrease risk and improve an organization’s overall financial profile. Taking de-risking steps now  can help make plan termination an option in the future for your organization.

Consider these 5 strategies before deciding to terminate your plan:

1.   A Plan soft freeze - Some soft freeze strategies can decrease future costs by limiting participation, freezing service or limiting future pay increases among other options

2.   A Plan hard freeze - Hard freeze strategies can also decrease costs by freezing or changing benefit accruals for active employees, or eliminating future increases to retirees

3.   Annuity buy-in - Purchasing annuities from insurance companies as plan assets may provide additional cash flow into the plan

4.   Annuity buy out- Purchasing annuities from insurance companies for all or some participants; the insurance company then assumes all future payments, risks and expenses

5.   Lump sum payouts- Utilize different payout strategies to improve plan health; lump sums can be offered to all or select participants to reduce overall financial risk.

Terminating your plan will remove long-term risk and improve your organization’s economic profile. However, developing and enacting a strategy to improve the health of your organization and retirement plan will be essential to reducing workload and risk prior to plan termination.

If you have questions regarding Defined Benefit Plans or de-risking strategies, feel free to contact Linda Lauer, Employee Benefit Plan Specialist, at llauer@cbiz.com or 901.685.5575.    

blog comments powered by Disqus


Phoenix tax Accounting affordable care act Alex Elliott anna howell Audit audit and assurance Award Awards awards and recognition BEPS Best Places to Work Betty Isler Bill Tapp BizJournals biztips bizwomen Blog Brad Hale brenda brigman bryan koch CBIZ CBIZ Kansas City CBIZ KC CBIZ MHM CBIZ MHM Memphis CBIZ MHM Tampa Bay cbiz security and advisory services CBIZ Women's Advantage CBIZBlog CBIZKC CBIZMHM CFO CFO & Controller Conference cfo conference CFO of the Year CFO of the year awards Charity Community Involvement Conference Construction Controller Conversation With country club plaza Craig Gilman cwa Dave Enick DOL EBP EBP Audits Ed Rataj Employee Benefit Plan Audits Employee Benefits employee engagement EmployeeBenefits entrepreneur EntreprenurialServicesGroup ESG Eustis Corrigan events ExecutiveAdvantageSeries Food Drive healthcare HR Human Resources Innovation International Tax Jenny Matasic Josh Finfrock Joyce Farris Kansas City KansasCity karen cassella KC CFO Breakfast Series KC Events KCEvents Linda Lauer Lloyd Grissinger Local Managing Director Manufacturing Mark Baricos MBJ Megan Murdock memphis Memphis Business Journal Memphis Daily News memphis super women in business mentoring monday mergers and acquisitions moira house Networking NFP Not-for-profit Paul Dunham pci compliance Phoenix promotions real estate Revenue Recognition SALT Service Social Committee sonya daniels Sponsorships Start Up Start Ups State and Local Tax steve dunavant Success Super Women in Business Tampa Bay Tampa Bay Business Journal tangible property regulations Tax Tax Incentives tax reform The Daily News Top Workplaces Tracey McDonald transaction advisory services Transfer Pricing UMB Bank University of Memphis Volunteer workplace award