We help organizations prepare and navigate the complex plan termination process. Whether your pension plan termination is many years away, a few years away or something you are ready to do now, we can help you through the process.

The formal pension plan termination process includes 13 primary steps found in our Path to Plan Termination.

It typically takes 12 months or more to get through the plan termination process and our team leverages tried and true strategies to streamline the process.

What plan sponsors need to know is that once the plan termination has begun, the steps in the process are defined by several governmental agencies, and each step has specific timing requirements that make all of the steps interrelated.

To be clear, these are deadlines that you need to hit. If you find something along the way that slows you down, or a road block that stops you, you CAN stop the termination process. But it is not like hitting pause, working out the issues, and then continuing. You’ll have to restart at the beginning. This is why it is very important to make sure you are ready before starting the process.

To get ready to terminate your plan, we review financial readiness, data readiness, and plan documents.

Our proven plan termination process and tools will ensure that once you begin the plan termination process, it will move smoothly and stay on track. We have helped hundreds of clients with plan terminations and are ready to assist with yours.

Download the Pension Sponsor’s Readiness Guide to Plan Termination, a 16-page resource with best practices for you to consider.

Financial Readiness         

One of the biggest challenges organizations face is when to terminate the plan. Determining the optimal time to terminate your pension plan depends on the confluence of multiple factors including interest rates, contribution levels, and asset performance.

To best prepare for a plan termination, you need a strategy which takes into account economic conditions, determining the funding policy the plan sponsor can afford, and monitoring the funded status periodically as conditions change.

In a recent plan termination, we worked with a client to help determine when they will be financially ready to terminate. The plan sponsor thought they were close to being financially ready, but once we calculated their liabilities using annuity purchase rates they were still more than five years away from plan termination. We worked with the client to develop a contribution strategy to achieve plan termination and helped them get back on track to being financially ready in a shorter time frame.

In addition, as organizations prepare to terminate their pension plan, they can consider de-risking strategies to get them closer to becoming fully funded.

Benefit Plan Design

There are many plan design options to consider prior to terminating a pension plan. If the plan is already frozen, this is a good time to review the company’s overall retirement plan strategy. If the plan is not frozen yet, plan sponsors will need to consider replacement benefits for current pension plan participants. 

Benefit plan design considerations include freezing a pension plan, designing replacement benefits post termination, decisions on lump sums, and confirming a DC plan rollover.

Two defined benefit plan options that are less risky than traditional defined benefit plans are market-based cash balance plans and variable benefit plans. These plans offer pension benefits while mitigating investment and interest rate risk for the plan sponsor.

If the replacement plan will be a defined contribution plan, there are many design options to consider as well as the impact the change will have on plan participants. We can help identify and model the best plan design options that can achieve both corporate and participant benefit goals.

Data Readiness

Having complete and accurate data is essential to calculate the benefits payable to each participant whether currently or formerly employed. This is the point where we determine if accrued benefits are accurate and final, if participant data can be verified (or at least documented the process to attempt to obtain it), review all Qualified Domestic Relations Orders, and verify address information (bona fide effort to locate missing participants too).


For participants in your plan, this is a key event in their planning for retirement.  And, once the IRS and PBGC have approved the termination, your participants must make significant financial decisions for their retirement planning within tight regulatory deadlines.

A communication strategy that includes the timing, target audiences, and key messages to be delivered is essential. It should also define who will deliver those messages and the communication channels you will use. The goal here is to ensure that the right people hear the right messages at the right time.

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Vested Terminated Buyout & DB Administration Optional Plan Benefits

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