Are Annuity Providers Safe?

February 24, 2021 by Michael Clark

Plan sponsors embarking on an annuity purchase face additional uncertainty and risks due to the implications of COVID-19. Transactions are continuing and there are no current solvency concerns, however awareness of market conditions and performing due diligence of insurance providers takes on additional importance.

Over the last decade, de-risking a pension plan through the use of an annuity buyout has become prevalent. In 2014, total buyout sales were under $10B; in 2020 they had skyrocketed to an estimated $25 billion. Pension plan sponsors that have offloaded liabilities to insurers through this strategy have saved on administrative costs and lowered funded status risk. 

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Originally Posted at ThinkAdvisor on February 23, 2021 by Michael Clark.