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Two Alternatives in the End-State

"Many plan sponsors find themselves in the fortunate position of approaching the end of their plan's glidepath.... Two primary 'in-plan' hibernation alternatives have emerged: completion and 'custom credit' programs. [1] [A completion program] ... typically retains traditional active managers against published benchmarks and adds a completion manager who uses U.S. Treasuries and interest rate derivatives to keep plan-wide exposures on target across interest rate and yield curve movements. [2] 'Custom credit' ... uses investment grade credit securities and seeks to hedge the market exposures of a liability without relying on published bond indices.... [This article] provides some guidance around when one may be preferred over the other."

Long Live Longevity Annuities (PDF)

"[In] reality, participants may face an all-or-nothing decision to either buy an annuity or draw retirement income directly from their portfolio (while bearing longevity risk). But prior to retirement the implementation of the [retirement-driven investing] strategy was largely unaffected by that decision. Once longevity annuities enter the picture, however, participants have a third option that has implications both prior to and during retirement. A participant may structure their retirement income by bundling two components: [1] a bond portfolio to fund spending during the first phase of retirement and [2] a longevity annuity to cover spending in the second phase."

Pension Plans Ignore Mortality at Their Own Risk (PDF)

"[T]he new assumptions reduce typical pension liabilities by 0.5%, a 3.6% drop in present value since the peak of longevity optimism corresponding to the release of MP-2014. The cumulative impact of the reductions is that approximately half of the increase in the decade-long MP 2014 update has been reversed.... Two critical questions plan sponsors face are [1] Will this allowance be adequate over the long-term, and [2] Given the overwhelming evidence of wide gaps between higher and lower socio-economic groups, how dangerous is it to assume all participants are 'average'?"

Primer on Completion Portfolio Management (PDF)

"As plan sponsors approach the end of their de-risking glidepath and begin to think about the structure of their end-state/hibernation portfolio, a logical next step is to customize their fixed income assets to more precisely match the exposures of the liability. Naturally, this step can introduce challenges and complexity. Utilizing a completion manager can address many of these challenges."

Groundhog Day Meets Mortality Assumptions (PDF)

"[T]he updated tables reduce the typical pension plan liability by about 0.4%. MP-2018 is a repeat of the prior three year's downward trend that has cumulatively reduced pension liabilities by approximately 3%, with the zenith of longevity optimism occurring with the release of MP-2014."

The Full Picture on DB Plan Partial Buyouts

"Unless a buyout is paired with a hibernation strategy, the sponsor may spend time and money arriving at an outcome that leaves a lot of pension risk unmanaged. A hard look at these different de-risking strategies suggests that the lion's share of pension risk can be eliminated by simply changing asset allocation."

Regulators Pave the Road to Retirement Income (PDF)

"Washington has shown its focus on removing barriers and fostering adoption of retirement income solutions. As employers increasingly seek to solve this retirement income puzzle, the changing regulatory environment is a win for everyone -- and for the participants in particular."

Pension Buyout Reality Check (PDF)

"Recent annuity purchases highlight the need to examine what drives their pricing. Plan sponsor announcements that allude to 'par' settlements relative to accounting values warrant a closer look at the plan's actuarial assumptions before reaching any conclusions about the attractiveness of a buyout's economics."

The Beauty of the Bundle: Combining Longevity Annuities and Bonds to Raise Retirement Income (PDF)

9 pages. "DC participants want the most for their money when choosing a retirement income strategy. While annuities can offer higher income, that value is partially reduced by expenses and the loss of control and liquidity. [The authors] quantify these drawbacks and find that the most efficient way to fund retirement spending may be to combine a longevity annuity (e.g., QLAC) with a bond portfolio."

Comparing De-Risking Strategies from a Contribution Perspective (PDF)

"[The authors] quantify both the costs and the corresponding risk reduction of two de-risking strategies that can potentially be implemented plan-wide: LDI hibernation and annuity buyouts. Specifically, [they] focus on how these strategies affect the expected size, volatility, and timing of sponsor contributions. Why contributions? Because eventually, the impact of both hibernation (internally implemented) and buyouts (externally implemented) will flow through the sponsor's check-book. Hence the contribution perspective provides a way to compare de-risking strategies from a common vantage point."