Pension Rescue Program

Many companies today are faced with underfunded pension plans that they can neither terminate (due to the plans' being underfunded) nor can they afford to fund.

They are caught in a perilous dilemma: the pension plan's liabilities are increasing at a rate of 5% or more, while the market investments are losing money during volatile or down markets and their fixed interest investments are earning somewhat less than the interest rate.

Frequently, such companies also have incurred losses since the outset of the recession and cannot make up the shortfall in the pension fund.

An employer who sponsors a pension plan can utilize multiple low-risk strategies which can improve its pension funding situation, including:

  1. Arranging for a pension settlement annuity policy to replace the pension plan as the guarantor of the pension benefits.
  2. The employer continues to be responsible (to the insurance company) for the shortfall.
  3. The employer works with our investment managers to obtain higher, low-risk investment returns on its investments. Our investment model employs independent investment managers with a proven, market- neutral performance record.

Advantages of such an arrangement include:

  • Potential for eliminating or reducing shortfall;
  • Moves shortfall from employer's balance sheet to footnotes relative to contingent liabilities;
  • Potential higher investment returns, and

Minimizes or eliminates increasing pension liabilities.