PBGC Updates Analysis of Partial Risk Transfers

Published July 01, 2024

The Pension Benefit Guaranty Corporation (PBGC) has posted an update to a 2020 report that analyzed partial risk transfer data reported by single-employer pension plans to PBGC on premium filings. The update includes data reported to PBGC in the 2015 through 2022 plan years, and summarizes the information by year, plan size, industry, plan frozen status, and premium funded ratios.

Background

The June 2024 update builds upon the 2020 report by utilizing premium filing data for plan years spanning 2015 through 2022.  In 2020, PBGC published a report analyzing risk transfer activity (RTA) among PBGC insured single-employer defined benefit pension plans based on premium filing data for the 2015 through 2018 plan years.

The information reported to PBGC includes the number of pension plans that engaged in risk transfer activities and the number of participants affected by these activities (i.e., the number of participants who received a distribution from their pension plan in the form of a lump sum cash out or an annuity purchased from a private insurance company). The participants who received a lump sum distribution or an annuity no longer have accrued benefits in their pension plans and thus, are no longer covered by PBGC insurance. 

Key Findings

  • Measured by event count, RTA during 2019 to 2022 is down compared to RTA during 2015 to 2018.
  • The number of plans offering lump sum windows each plan year has decreased materially over the observed period, dropping from 960 lump sum window offerings in 2015 to 94 lump sum window offerings in 2022 (with a slight bump up during 2020 and 2021).
  • In contrast, the number of plans purchasing annuities each year has increased from 91 purchases in 2015 to 225 purchases in 2022.
  • 1,065 plans engaged in risk transfer activity in multiple years between 2015 and 2022. Of those plans, 225 purchased annuities in multiple years.
  • 629 plans had at least one annuity purchase and made at least one lump sum offering during this period.
  • During the entire study period (2015-2022), about 4.1 million participants were removed from single-employer plans due to risk transfer activity.