As pension funding improves, the Washington Post’s Michael Fletcher notes that more companies will offload some or all of their liabilities, through either lump sum payouts to workers or transferring risk to third parties. The ratio of liabilities to assets reached 93% at the end of 2013, up from 77% in 2012 — making it the highest ratio since 2007’s 106% mark.
Experts predict that the improved funding situation makes it more likely that 2014 will be a big year for DB risk transfer. Add in the increased cost of PBGC premiums that was included in the recent congressional budget deal, and that likelihood grows. And if interest rates rise, even more DB managers will transfer risk.
According to DOL statistics, only 18% of workers are now covered by DB plans — half the amount covered in the 1990s. With less DB coverage and increased costs, more Americans will be left on their own to save for retirement.
