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Obtaining Annuity Bidders

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A DB plan is terminating and there will be between 7-12 participants who purchase annuities. The broker assisting with the annuity solicitation commented:

As we got further into our discussions with each carrier and realized that we did not have many participants that were interested in the annuity option, our choices narrowed further as group policy providers became disinterested. Lincoln National would not allow their products to be used with a terminating pension plan. Principal Financial could only work with us on a group platform, which would require more participants to choice the annuity option. MetLife and Prudential also declined to open their annuity products in this instance due to the size of the quote. Since American General is willing to offer individual annuities, they became the leading option.

Are these comments consistent with what others are finding?

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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We had two clients purchase annuities in 2014. One was a 4 life $152,000 and the other was a 5 life $387,000. The only problem we had was with the 5 life annuity that included 1 deferred vested participant. Principal and Mutual of Omaha were the only ones who would bid on it because of the deferred annuity.

What would the lump sum value be for those 7-12? Are they all currently in pay status? If you are talking about immediate annuities, I would expect the $ to have more impact than the # of lives.

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