Pension Definition

Pension Termination Explained

Today’s volatile business climate, often characterized by mergers, acquisitions and bankruptcies, may prompt plan sponsors to terminate all or portions of their defined benefit plans.

Of course, terminating a defined benefit plan does not relieve the plan sponsor of the responsibility to provide plan participants with retirement benefits. Deciding on the best way to fund these benefits can be a costly, time-consuming and complicated process.

Terminal funding is an increasingly popular way to remove the long-term future liability from a corporation's books in a short time with a single premium, group fixed annuity purchased from a financially sound insurer which provides:

  • Guaranteed, fixed payments to a designated group of participants under a defined benefit plan
  • Offers a cost-effective way to terminate a defined benefit plan, without jeopardizing current and future retiree benefits