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5 Steps in the Pension Risk Transfer Transition Process

To ensure a smooth Pension Risk Transfer (PRT) process, it’s important for plan sponsors to understand what to expect during the transition stage; the period when their annuitants’ data is transferred to the new insurance company. Below are 5 steps a plan sponsor will go through during the transition.

1. Insurer selection

Plan sponsors who have embarked on the PRT journey will work with an intermediary throughout the insurer selection process, which includes the RFP, preliminary, and final bidding stages. The plan sponsor or their elected Independent Fiduciary will select the insurer they feel is most qualified to manage the benefits moving forward. Here are some of the key factors to consider when selecting a PRT provider.

2. Communication

Plan sponsors will issue a “goodbye letter” to all annuitants involved in the transaction, informing them that their current pension benefits will now be administered by an insurance company, and that no changes will be made to their existing benefits besides the name of the issuing company.

3. Welcome letter

An official welcome letter from the selected insurance company should be sent out to all members affected by the PRT transaction. This letter serves as a reminder that their benefits will now be handled by the insurance company and provides contact information for the retirement services team, who will be responsible for assisting with their annuities and any questions they have. Finally, the letter provides the annuitants with an opportunity to review the data that the insurance company has on file before payments commence.

4. Data cleansing

The insurance company will capture all data changes, such as updates to contact information provided by the annuitants, plan sponsor, or outside vendors, during an agreed upon timeframe. The data is carefully entered into the insurer’s systems so that annuitants continue to receive their retirement benefits with no disruptions. Some of these data changes may affect the price of the PRT transaction.

5. True-up

The selected insurance company’s Transition team is responsible for conducting a true-up; the recalculation of the price of the transaction after the data cleansing period. After this adjustment, the insurer and plan sponsor will settle any further charges.

Knowing what to expect in the PRT process is the first step in facilitating a smooth transition. This can also help provide plan sponsors with peace of mind knowing that their members will be well taken care of, resulting in businesses being able to focus on doing what they do best.

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About Legal & General Retirement America

Legal & General Retirement America (LGRA) specializes in customized pension risk solutions for institutional clients in the US market. Established in 2015, Legal & General Retirement America is a business unit of Legal & General America, Urbana, MD. Legal & General America life insurance and retirement products are underwritten and issued by Banner Life Insurance Company, Urbana, MD and William Penn Life Insurance Company of New York, Valley Stream, NY. Banner products are distributed in 49 states, the District of Columbia and Puerto Rico. William Penn products are distributed exclusively in New York; Banner does not solicit business there. The Legal & General America companies are part of the worldwide Legal & General Group. CN 11092022-1