Vested Terminated Buyout & DB Administration Optional Plan Benefits


A non-profit health care system provides a traditional defined benefit pension plan


The system’s goal was to cut costs and dampen volatility in their pension plan due to changes in the healthcare market caused by the Affordable Care Act, reduction in Medicare reimbursements, an erratic stock market, complex government laws on funding and reporting of future pension benefits, increasing PBGC premiums, and competitive trends in compensation and benefits.

To further reduce plan volatility and the size of the plan, and begin preliminary work to prepare for eventual plan termination, Findley assisted the system in settling a significant portion of the Plan liability by offering 1,000 former employees the opportunity to receive a lump sum distribution of their vested accrued benefit.


Findley performed a detailed analysis to outline the financial impact on cash funding requirements, PBGC premiums, and accounting reporting, including special settlement accounting requirements. Also included was information about the potential total cash to be paid out of the plan as lump sums, and typical rates of electing lump sums in this type of offering.

The analysis outlined the administrative costs, steps in the process, timing, and resources required to administer the buyout – from amending the plan and developing the participant communications, to preparing for a surge in participant phone call volume and processing election forms.


Over a 6-month period, lump sums were offered to 950 vested terminated participants, of which over 500 elected the lump sum, amounting to just under $13 million in lump sums paid. In the process, nearly 900 phone calls were handled with average call time of 4.5 minutes.

As a result of decreasing the number of participants and total liabilities in the plan, risk exposure was reduced for the future lifetime of the plan. With a large portion of the terminated vested group removed from the plan, the remaining participants’ current location identified, and all benefit calculation details collected and ready, when the plan sponsor is ready for termination of the plan, the process will be much easier.

Findley’s spearheaded:

  • Project Management of the buyout process
  • Eligible participant analysis, including death search, and obtaining current addresses
  • Certification of prior actuary’s accrued benefit
  • System and data preparation – calculation of all vested accrued benefits, lump sum options, and immediate annuities offered
  • Participant personalized communication packets
  • Online Election Portal to help increase the take rate and improve the participant experience
  • Call Center support to answer buyout packet and eligibility questions
  • Distribution processing: review/follow-up of returned paperwork for completeness and authorization to the trustee for distributions.
Category: Findley Proof