Ensure Stable Contributions and Retirement Security

With Adjustable Pension Plans

Are Adjustable Pension Plans Right for You?

  • Expect stable annual contributions because you share investment risks with covered employees
  • Offer lifelong retirement security to your participants
  • Receive expert advice from Cheiron. We helped design these plans and set up the first plan in 2012. We understand their optional features better than any other actuarial consulting firm.

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Sample Benefit Accruals
Accurals
Sample Plan Sponsor Contributions
Contributions

How do Adjustable Pension Plans Work?

  • Balance the investment risks with participants and adjust the accrued benefit or future benefit accruals based on the plan’s investment performance
  • Contribute a predetermined amount annually
  • Secure a fixed pension for participants at retirement, or let retiree benefits vary with investment performance

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What are the Advantages of Adjustable Pension Plans for Plan Sponsors?

  • Share investment risks with participants
  • Budget easier because you contribute a fixed amount annually to the plans
  • Protect the funding of the pension plans. The plans are more likely to remain well funded because of the reduced risk.
  • Avoid regulatory uncertainties because the Internal Revenue Service has already approved adjustable pension plan designs
  • Attract and retain talented employees because the plan enhances retirement security

For corporations or single-employer plans:

  • Reduce the risk of paying steep PBGC variable premiums on top of the flat premium of $80 per participant. Fully-funded plans can avoid the variable premium of $43 per $1,000 of unfunded vested benefits in 2019.

For multiemployer pension plans:

  • A higher likelihood of being fully funded means you can avoid withdrawal liability.

What are the Advantages of Adjustable Pension Plans for Participants?

  • Receive a monthly pension for life. Participants needn’t worry about outliving their retirement savings.
  • Protected funding levels because of the lower risk
  • Pooled and professionally managed investments and more conservative asset allocations. Unlike 401(k)-type plans, participants do not shoulder all the investment risks.
Ask us to create an adjustable pension plan for your workforce