The Pension Risk Transfer (PRT) process can be daunting, especially for plan sponsors who have not done a transaction before. There are many factors to consider when choosing an insurance partner and many moving parts once a company has begun the transition process, the period after the transaction when the insurer onboards the data and starts administering benefits to the participants. Such data may include former and current employee details, and any joint annuitant and beneficiary data as well.
The overarching goals of a PRT transition should be efficiency and simplicity. In order to achieve those objectives, it's important that you work with a partner who has specific expertise in the PRT space, prioritizes high levels of service and has the infrastructure in place to offer an organized and clearly defined transition process. After all, you and your team have spent months preparing for this transaction. The transition process is when you should pass a majority of the remaining work over to your chosen insurer.
Below are four key attributes to consider as you search for the right partner to guide you through your PRT transition:
1. Clear communication
Excellent communication should be a pillar of the PRT process. As many plan sponsors haven't experienced a PRT transition before, the insurance partner should educate on best practices and offer consistent and clear communication at each step. For example, at Legal & General Retirement America, we begin each transition with a meeting to walk through a clear and formal transition timeline.
Time spent at the onset of the PRT process allows you to get to know your transition management team and have a clear understanding of each milestone to come. It also gives you the opportunity, upfront, to ask as many questions as you'd like. From the beginning and through subsequent weekly updates, a concrete and manageable timeline should be established and adhered to.
2. Data security and organization
Data transition is one of the elements of a PRT transaction that clients tend to be the most concerned about, and where the insurance partner you choose can demonstrate the greatest value. Transitioning massive amounts of data can be overwhelming, so the focus should be on making this process as streamlined as possible. Working with a skilled team of data analysts using agile and secure technology along with a dedicated transition manager will result in a lighter touch on your part.
When it comes to organizing the data, a full-service partner will again prove valuable. Data inconsistency is a frequent issue in the defined benefit space, with decades-old information slipping through the cracks of legacy databases. Working with a partner who takes on the cost and effort of sweeping and scrubbing that data to ensure accuracy and identify any gaps is a significant value.
3. Superior customer service
Much as you have diligently assisted employees with their pension benefits, it's important to know that same diligence and care will be provided to your participants by the insurer. Working with an insurer that employs dedicated project managers for the transition is a key component to ensuring a smooth transaction.
4. Support that extends to your employees
Just as consistent communication between you and your transition partner is essential, so too is bringing that same level of transparency to your plan participants, making the transition as seamless as possible on their end. Ensuring plan participants have clarity around and throughout the PRT process is critical; ensuring they have the support and service they need to feel confident and reassured during the process is equally important.
An ideal partner will guide you in how and when to communicate elements of the transition most effectively to your employees, starting with an introductory transition letter with detailed information on what they can expect at each stage. Once the transition letter has been sent, insurers should be ready to accept calls and answer questions, ensuring a seamless transition for participants.
Choosing a trusted partner for a PRT transition will help secure long-term financial stability for your plan participants while giving them the peace of mind that comes from working with true pension experts.
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. 21-126