Terminal Funding

When a pension plan, or part of a pension plan, is shut down, the plan sponsor must fund the future payment of current benefit liabilities resulting from that plan. This is usually accomplished by either

• making a one-time, lump sum payment to each participant or
• settling the liability through the purchase of group annuity contract (Terminal Funding)

The purchase of a group annuity contract transfers both the liability and the administration of the plan from the plan sponsor to an insurance company. With terminal funding programs the need often is a result of

• specific market forces such as bankruptcy, merger and acquisition, consolidation
• desire to save plan costs such as rising administrative fees and plan valuation and service expenses

Why Plan Sponsors Terminate Plans

The purchase of a group annuity contract can help resolve problems that a Plan Sponsor has been dealing with concerning their Pension Plans. Some of the common reasons for a plan closeout are:

• mergers & acquisitions
• bankruptcies
• plant shutdowns or layoffs
• access to excess assets in a plan (overfunded plan)
• shift in a benefit philosophy from a defined benefit plan to defined contribution plan
• court ordered liquidation

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.

Retirement Plan Terminations

A number of forces can lead to the sound decision to terminate a retirement plan, including:

• Market actions such as a company merger, consolidation or bankruptcy
• Corporate desire to phase out old and underutilized plans in order to focus efforts on more participant-friendly retirement options
• Financial concerns surrounding the continued cost of administration and funding of plan benefits

Eliminating the Mystique: When deciding whether to terminate all or part of a plan, BCG Terminal Funding Company can be an invaluable ally and confidant. More than just seeing to the steps required to terminate a plan, BCG Terminal Funding Company takes the commitment to you further. We bring the expertise and organization to ensure that whatever action is taken, it is done in the most informed and beneficial manner to your business and participants. To find out more, see The BCG Terminal Funding Company Difference.

Working to find the best annuity provider for your particular circumstances is another of the services BCG Terminal Funding Company provides. To find out more, see Annuity Providers.

Helping to increase awareness by providing resources for learning about product offerings. To connect to various resources within the marketplace, see Industry Links.