Lockheed Martin Corp. made headlines at the end of January when it announced plans to shift retiree pensions to annuities offered by a life insurer. In doing so, it joins an expanding list of companies, including FedEx Corp., Raytheon Co. and Alcoa Corp., that have transferred billions of dollars in liabilities to an insurer.
These transfers allow companies to focus on their core businesses. At the same time, they let life insurers do what they do best — provide solutions that manage long-term risk and protect consumers’ retirement security.
While pension risk transfers shift obligations to an insurance company from an employer, they don’t change the benefits retirees receive; that’s because annuities, like traditional pension plans, provide guaranteed payments for life.