Pension De-Risking Accelerates: 95% of DB Plan Sponsors Target Full…

Event summary

95% of defined benefit (DB) plan sponsors with de-risking goals now intend to fully divest pension liabilities, up from 76% in 2019.
88% of these sponsors are considering a pension risk transfer (PRT) solution with an insurer.
Average funded ratio stands at 96%, with 36% of plans overfunded and 102% among plans with $3 billion or more in assets.
55% of sponsors expect to complete divestment within two to five years, while 25% aim to do so within two years.
92% of sponsors have established trigger frameworks for PRT transactions, with 78% involving C-suite discussions.

The big picture

The surge in pension de-risking reflects a decade-high funding position for DB plans, driven by strong financial performance and strategic governance alignment. This shift underscores a broader industry trend toward risk mitigation, with insurers like MetLife poised to benefit from heightened demand for PRT solutions. The growing preference for retiree lift-outs and buy-ins among larger plans signals a strategic pivot toward flexible, phased divestment approaches.

What we're watching

Execution Timelines: How the pace of PRT transactions will be influenced by current interest rates and annuity pricing.
Governance Dynamics: Whether the increased C-suite involvement will accelerate or complicate de-risking decisions.
Technology Integration: The extent to which AI and OCIO adoption will streamline pension data analysis and strategy evaluation.