MetLife Retirement & Income Solutions

2022 Pension Risk Transfer Poll

Oct 11, 2022

How Companies Are Protecting Pension Benefits Amid a Challenging Economic Environment

MetLife has been tracking pension de-risking trends and developments for many years. For our 2022 Pension Risk Transfer Poll, MetLife commissioned a survey of 251 defined benefit plan sponsors to assess the impact of market forces on their de-risking plans. This Poll:

  • Assessed the impact of the current macroeconomic environment on pension de-risking
  • Identified the most important considerations for a pension risk transfer (PRT) to an insurer and the top drivers of PRT timing
  • Determined which PRT activities are most likely to be used and for which participant population(s)
  • Gauged whether plan sponsors believe the high-level of PRT activity will continue for the foreseeable future
Amid a challenging economic environment, many of the country’s largest employers are taking steps to make sure that traditional pension plan benefits are protected."

Through a pension risk transfer, which shifts some or all risk to an insurer, a plan sponsor can reduce a plan’s volatility, improve its funded status and restore stability to the company’s balance sheet – all while ensuring that benefits payments are paid, and the plan sponsor’s promise is being fulfilled. 

Today, nearly nine in 10 plan sponsors say they are likely to consider a PRT option from an insurance company in the next five years. With all other factors being equal, nearly all plan sponsors prefer to work with an insurer who has significant, long-term experience.

Want more insights from the 2022 PRT Poll Report?

Several market forces are favorably impacting the likelihood that companies will use a PRT:

96 % Geopolitical Environment
94 % Market Volatility
91 % Rising Interest Rates
91 % COVID-19’s Transitional Phase Between Pandemic and Endemic
86 % Inflation

Pension risk transfer industry sales in 2021 were a record-setting $38 billion. When surveyed for MetLife’s 2022 PRT Poll, 64% of plan sponsors predict the number of large PRT transactions will likely increase in the next five years.

Percentage of Plan Sponsors That Will Use an Annuity Buyout:

57
%

2022

34
%

2020

Did you know?

92% of plan sponsors said continued rising interest rates would make them more likely to move forward with their de-risking plans.

Conclusion

What is very clear from MetLife’s latest PRT Poll findings is that pension de-risking is top of mind for many DB plan sponsors, and the industry’s high level of activity is expected to continue for the foreseeable future. For many companies, now may be an opportune time to transfer some or all of their pension obligations to an insurer – ensuring that their pension promises to their retirees will be kept.    

Want more insights from the 2022 Pension Risk Transfer Poll?

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