Defined Benefit Plans

Defined Benefit (DB) pension plans provide employers with a tool to reward traditional desired employee behavior (long tenure, timely retirement) as well as a way for retirees to gain more security than that provided by a defined contribution plan. However, these plans, with their long term liabilities and assets which follow the market can generate large swings in a company's income statement and cash flow. Tax law requires employers to contribute assets when the plan becomes underfunded, however assets cannot be taken out easily if the plan is over funded.

An employer now has the opportunity to transfer the risk to a captive insurance company. Spring has a pending patented method for risk transfer which reduces the volatility in a pension plan while increasing the benefit security for the participants. The pension retains a stable funded status while investments and longevity risk is in the captive where it can be better managed.

Pension Funding Benefits:

• Reduce volatility of funded status
• Reduce uncertainty regarding future cash contributions
• Reduce volatility of accounting costs
• Reduce trapped assets while minimizing excise taxes
• Improve benefit security for participants