Principal Financial Group has developed the patent-pending Principal Complete Pension Solution and the Principal Pension Risk Management Dashboard to help defined benefit (DB) plan sponsors manage the financial, demographic and fiduciary risks in their plans.
The Principal Complete Pension Solution system provides a technology-driven approach to pension risk management that can be tailored for individual plan needs alongside what the company says is a first-of-its-kind annuity quote commitment to ensure plan sponsors can consider transferring risk to Principal when the time may be right for their plan.
The system uses proprietary technology to combine expertises spanning actuarial science, liability-driven investing (LDI), pension risk transfer, as well as plan administration and data management to offer a complete suite of risk management services for both ongoing and frozen defined benefit plans.
The process includes:
- Technology integrating key defined benefit services—including administration, actuarial, investment management, liability-driven asset management, trust and custody of plan assets and pension risk transfer services;
- An up-front audit and review of participant data to help ensure it’s in good order for ongoing administration or plan termination; and
- Opportunity for plan sponsors to secure a commitment to quote an annuity, transferring risk to Principal.
Legal & General Retirement America’s latest Pension Risk Transfer Monitor shows the U.S. pension risk transfer market has remained very active throughout the first three quarters of 2019, with consistent deal flow that is starting to ramp up for the typical Q4 rush. Comparing this year to last, it has seen a 12% increase in total deal count.
The increase in plan terminations that Legal & General observed earlier this year has continued. Plan terminations accounted for just under $4 billion of sales in the first half of 2019, nearly surpassing total plan termination sales in 2018.
To complement the Principal Complete Pension Solution, Principal built the Principal Pension Risk Management Dashboard, a unified platform for monitoring key interest rates and equity market volatility that may impact a plan’s funded status, contribution requirements and financial accounting expenses. The dashboard enables plan sponsors to see potential impacts on their plan driven by the economic environment in order to help them make informed asset allocation and risk transfer decisions.Principal notes that every pension plan is unique, and it’s important to tailor programs based on need.
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