Not a Member? Get access to HR news and resources that you can trust.
Standing desks and other innovative workstations can help counterbalance the negative health effects of sitting.
Is your employee handbook ready for the New Year? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Get the HR education you need without travel expenses or time out of the office.
Elevate Your Talent Strategy. Join us in Chicago, IL – April 24-26, 2017.
As defined benefit pension plan sponsors seek to transfer pension risk, offering lump-sum pension cashouts for terminated vested participants has been an attractive option to consider. Many plan sponsors embarked on such cashout projects beginning in 2012 and this trend is expect to intensify throughout 2014, according to
an analysis by HR consultancy Mercer.
“Among the attractions [of lump-sum cashouts] to the plan sponsor are reduced pension liability, leading to lower plan financial risk and volatility,” said Matt McDaniel, a senior consultant at Mercer. “Other advantages include eliminating [Pension Benefit Guaranty Corp.] premiums, investment and administrative costs, and making payments before updated mortality tables come into effect. However, the business case for pension cashouts is driven by the unique circumstances of the plan sponsor and a cashout will not make sense in every situation.”
These programs also tend to be popular with eligible participants, McDaniel added. “Take-up rates for an effectively executed lump-sum exercise can be upwards of 50 percent.”
Some sponsors for whom a cashout might be appealing are waiting on the sidelines, Mercer’s analysis notes, hesitant because of concerns that include the following:
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
Other SHRM Articles on Pension Payouts:
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Choose from dozens of free webcasts on the most timely HR topics.
SHRM’s HR Vendor Directory contains over 3,200 companies