A study by LIMRA SRI shows that U.S. companies continue to move away from DB plans as sales on pension buyouts continue to rise. Sales in 2012 are considered an anomaly because of the large transactions by GM and Verizon, but in 2013 sales had their best year since 1999. LIMRA SRI, which tracks 10 pension buyout firms in its study, predicts that 2014 will be even better due to three factors:
• funding of pension plans at 91% (according to Mercer), the highest since October 2008;
• an improved interest rate environment; and
• higher PBCG premiums, which are only expected to rise.
As states move to freeze their pension plans and move new and, in some cases, current workers into DC-like plans — coupled with the spread of state-mandated auto IRA programs for smaller companies — the amounts of people and assets flowing into participant-directed retirement plans and IRA rollovers should continue to grow at a brisk pace.
