While cashing out pensions for terminated vested employees may be a beneficial move for employers, many are hesitant to do so because of concerns that can easily be addressed by benefit advisers and brokers.
Seeking to transfer pension risk, many defined benefit pension plan sponsors have opted to offer lump sum cash out windows for terminated vested participants, and the consulting firm Mercer expects this trend to intensify in 2014 due to increases in interest rate levels and improvements in funded status during 2013. Still, while the advantages for employers may be plentiful, many still hesitate to go forward with such a move due to worries about interest rates, liability, cost and more.
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