As insurance companies take over corporate pensions, advocates are concerned about risks to retirees.
How safe is your pension? As COVID-19 shutdowns hobble the U.S. economy, the question has taken on more urgency.
While risks associated with underfunded pensions for state and local government employees have been known for years, a new concern has arisen, pension rights advocates say. It centers on the growing trend of insurance companies taking over pensions for employees of private companies.
“This is what we’ve worried about — when companies sell off their pension plans,” said Karen Friedman, policy director at the Pension Rights Center, a nonprofit focusing on workers’ retirement security. “Is it safe to transfer money out of pension plans insured by the [government-backed] Pension Benefit Guaranty Corporation to insurance companies where the protections for consumers are scant?”
Pension obligations are costly and companies have been eager to get rid of them in recent years. Insurers have been happy to take on their assets — such deals have totaled $110 billion since early 2015.