Defined Benefit Plans
Answering Today’s Defined Benefit Plan Questions
While fewer employers are offering Defined Benefit (DB) pension plans, there are still 45,600 DB plans in the United States1. We have more than 75 years of experience with retirement plans2 and deep actuarial consulting expertise. As the number one provider of DB plans3 and a leader in pension risk management4, we can help you answer some of the top questions DB plan sponsors are asking right now:
- Should we change the asset allocation?
- How can we terminate the plan in the most effective manner?
- Should we make plan design changes?
- How can we forecast future costs and budget for them?
- Can we manage the retirement plan more efficiently?
1RRI, Retirement Markets 2016, April 2016
2As of 12/31/2016
3PLANSPONSOR DB Administration survey, May 2015
4Principal® is ranked “Best in Class” for actuarial consulting skills and services, including providing guidance to effectively manage my DB plan, Chatham Partners 2015 Client Satisfaction Survey.
We offer a full range of DB plan services and solutions, including:
- Traditional DB plans – active or frozen
- Cash balance plans – active or frozen
- DB plan terminations
- Pension risk transfer
- Full-service solution or outsourced arrangements (actuary, third-party administrator (TPA), and/or Registered Investment Advisor (RIA)*)
- Mutual fund or separate account investment platforms
*If needed, asset allocation services are available through Principal Financial Advisors, Inc., a registered investment adviser and member company of the Principal Financial Group.
Plan sponsors face a number of factors that can make managing a DB plan more challenging than ever:
- Legislative changes
- Accounting rule changes
- Market volatility
- Administrative complexity and related costs
We can help you and your clients manage these challenges in a strategic and efficient manner through:
- Cost modeling – projection and forecasting services
- Benefit modeling – plan design services
- Risk management – asset liability modeling (ALM), liability driven investing strategies and other risk management services
We can perform all of the in-depth consulting and actuarial services that major actuarial consulting firms provide. Our plan consulting team includes 22 independent enrolled actuaries with an average of more than 25 years of experience1, as well as trust specialists, plan document specialists and other specialists.
DB Termination Strategies
Many sponsors have a frozen DB plan but lack a strategy to terminate it. From the development of a formalized exit strategy to the final distribution of assets to participants, we can help you and your client actively manage the termination process in a timely and cost-efficient manner.
Our four-step approach includes:
- Evaluate costs to terminate: Determine short- and long-term plan costs, and establish a timeframe.
- Evaluate funding strategies: Help you select the desired option.
- Evaluate asset allocation strategies: Identify risk, including the advantages of changing the asset allocation strategy over time.
- Monitor progress: Ensure the termination is on track.
Investment Advisory Services
For sponsors looking for a fully bundled approach, we offer ERISA Section 3(38) investment advisory services through Principal Financial Advisors, Inc.2,3,4,5, a registered investment adviser and member company of the Principal Financial Group®.
1As of 12/31/2016
2Principal Financial Advisors, Inc. is a registered investment adviser and member company of the Principal Financial Group.
3Asset Allocation strategies are developed using Separate Accounts available through a group annuity contract of Principal Life Insurance Company.
4Insurance products, plan administrative services, and separate accounts which are available through a group annuity contract, are provided by Principal Life Insurance Company, a member of the Principal Financial Group, Des Moines, IA 50392. Certain Separate Accounts may not be available in all states or U.S. Commonwealths. Contract with Principal Life, Des Moines, IA 50392.
5 The plan sponsor remains the "named fiduciary" of the plan, but you select Principal Financial Advisors, Inc. as your plan's investment adviser.
No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values.
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Evaluating the Total Cost of Your Defined Benefit Plan Short (PQ11552)
This resource helps you and your client evaluate the true cost of their plan. Use it to start a conversation about opportunities to find efficiency and reduce costs.