June 5, 2013

For additional information:
Jason Hammersla
office 202-289-6700
cell 202-422-4652 (cell)

Pension plan ‘de-risking' a natural reaction to funding, accounting volatility, PBGC premium challenges

WASHINGTON, DC — The American Benefits Council testified before the ERISA Advisory Committee on June 5, describing the key motivations that have caused many employers to consider reducing their pension plan liabilities by "de-risking."

Craig Rosenthal, a partner with Mercer, testified on the Council's behalf, emphasizing that the legislative and regulatory environment for pension plans has made sponsorship increasingly difficult over the past few decades.

"If funding and accounting obligations can be stabilized and the spiraling up of Pension Benefit Guaranty Corporation (PBGC) premium obligations can be reversed, there would be far less reason for companies to de-risk," Rosenthal told the panel.

"There is no one-size-fits-all answer as to why some companies adopt de-risking approaches and others do not, nor is there a simple answer as to why companies that do de-risk do so in different ways," Rosenthal said. As the EAC formulates its recommendations to the U.S. Department of Labor on this subject, we urge its members to consider that the best way to preserve defined benefit pension plans is to mitigate the complex financial challenges imposed on pension plan sponsors.

Rosenthal's testimony is available on the Council website. Council staff are available to discuss employer plan sponsors' many considerations with regard to the sponsorship or termination of a plan. For more information, please contact Jason Hammersla, Council director of communications, at or by phone at 202-289-6700 (office) or (202) 422-4652 (cell).

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.