According to MetLife’s 2022 Pension Risk Transfer Poll, 95% of defined benefit (DB) plan sponsors say that higher inflation is impacting their decision to move forward with a pension risk transfer (PRT), including 50% saying it’s very impactful.
Elizabeth Walsh, head of Pension Solutions at MetLife, commented, “The economic landscape has shifted significantly since our last Poll and this change has led DB plan sponsors to take a closer look at their plans and pension risk transfer options.
“Not only is inflation a factor, but other considerations, such as market volatility and rising interest rates, can potentially impact the decision to move forward with PRT.”
According to the Poll, 92% of plan sponsors say that continued rising interest rates will make them more likely to move forward with a pension risk transfer, including 43% who say a PRT is much more likely if interest rates continue to rise.
The Poll also found macroeconomic concerns such as the geopolitical environment (96%), market volatility (94%), rising interest rates (91%), COVID-19’s transitional phase between pandemic and endemic (91%), and inflation (86%) are prompting plan sponsors to hold steady or even accelerate their plans to de-risk.
89% say they are likely to consider a PRT option from an insurance company in the next five years and 35% of this group say it’ll be within two years.
Walsh added, “2022 is shaping up to be another record year for the PRT market and we don’t anticipate activity will slow down for the foreseeable future.
“It is clear from our Poll’s findings that pension de-risking is top of mind for many DB plan sponsors. In fact, 95% of plan sponsors say their company routinely weighs their DB plan’s value against the cost of the benefit.”
The poll was fielded between July 8th and July 15th, 2022, with MetLife commissioning MMR Research Associates, Inc. to conduct the online survey.
The Survey responses were received from 251 DB plan sponsors with $100 million or more in plan assets who have de-risking goals. This included 57% of plan sponsors who reported DB plan assets of $500 million or more.
