Nearly All Plan Sponsors with De-Risking Goals Intend to Completely Divest Their Company’s Pension Liabilities in the Future, MetLife Poll Finds

Despite a brief slowdown in pension risk transfer (PRT) transactions at the beginning of the COVID-19 pandemic, new poll results from MetLife indicate that PRT activity will remain robust for the foreseeable future. MetLife’s new 2021 Pension Risk Transfer Poll, released today, found the vast majority (93%) of plan sponsors with de-risking goals intend to completely divest all of their company’s defined benefit (DB) pension plan liabilities at some point in the future, up from 76% in 2019.

“The PRT pipeline remains very active, and we anticipate this will continue in the near future and beyond, with 2021 potentially being another record year for the industry,” said Melissa Moore, senior vice president and head of Annuities at MetLife. “In fact, the Poll found that recent well-publicized annuity buyout transactions secured by major, Fortune 500 corporations¹ may be driving interest in these solutions, with 93% of plan sponsors reporting that these deals are increasing the likelihood that they will consider an annuity buyout.”

The Poll found that among those plan sponsors who plan to fully divest their DB plan liabilities at some point in the future, 32% have DB plan assets of $1 billion or more, 35% have assets in the $500-$999 million range, and 33% have assets in the $100-$499 million range.

Catalysts for Pension Risk Transfer

The 2021 PRT Poll found nine in ten (91%) plan sponsors are weighing their DB plan’s value against the risks to which it exposes their organization.

According to the Poll, when asked about the primary catalysts for initiating a pension risk transfer to an insurer, plan sponsors cited interest rates (61%), market volatility (47%), an increase of the volume of a plan’s retirees (37%) and favorable annuity buyout market pricing (35%).

COVID-19 Impact

The ongoing COVID-pandemic does not appear to be negatively impacting plan sponsor desire to move forward with a pension risk transfer. Nearly half (47%) of plan sponsors reported that there had been no change to their de-risking plans due to the pandemic, with 42% stating that COVID-19 has actually increased or accelerated the likelihood they would transact. Only 11% of plan sponsors say that the pandemic has decreased or delayed the likelihood of entering into a transaction – down from 19% last year.