annuity purchase with insurer

[Gary]

all the db plans i work with generally have 10 or fewer participants.

And when the plans are terminated they generally all take lump sums.

i have a first now; a situation where a participant wants to continue receiving his annuity.

so they will have to purchase an annuity

with that said; any recommendations as to how to choose an insurance company for this?

not sure if the plan sponsor will want my firm to investigate which company or if they will want to do it.

comments from anyone with recent practical experience is appreciated.

thanks

[Effen]

Here is a DOL link to get you started.

DOL link

Long and short, it is a fiduciary decision and must be in the best interest of the participant.

Immediate annuity rates are in the low 3% range currently, plus the expense load. I will most likely be significantly more than the lump sum, especially for a single annuity.

Lots of people will help you, for a fee - try Brentwood or BCG Terminal Funding. They can also go directly to the insurance company and get quotes themself.

[david rigby]

... and check to see what the plan says. It may be reasonable, especially considering Effen's warnings about the cost of a commercial annuity, to have the trust pay a monthly benefit to the retiree.

Edit: I may have misinterpreted your original post. Are you saying the plan IS terminating? or is this a "what-if"?

[SoCalActuary]

Irrelevant, cheap shot - buy the annuity from a public pension plan using an 8% interest assumption and an assumed cost of living adjustment.

But seriously, discuss with the fiduciaries about the three ways to manage this:

1. buy the annuity

2. term the plan and have PBGC take it over if underfunded

3. self-insure the payments until the interest rates become reasonable again