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Several Strategies Help DB Plan Sponsors Manage Financial Risks

September 23, 2019

As employers wrestle with how to best mitigate the financial risks associated with sponsoring defined benefit (DB) pension plans, they should weigh the relative benefits of limiting versus eliminating those risks over time, according to a new white paper from MassMutual, “Key Decisions for De-Risking Your Pension Plan.”

There are four main strategies, according to MassMutual: hibernating risks, establishing glide paths, hedging risks by re-allocating investment assets and shifting pension obligations to a life insurer by purchasing annuities.

“There are several different risk strategies for employers to contemplate when managing pension risks over both the short and long term,” says Neil Drzewiecki, head of pension risk transfer for MassMutual. “More employers are concluding that transferring those risks to a life insurer is in the best interest of the company and its employees.

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