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Winding Down a Hard-Frozen Defined Benefit Plan

White paper from The Principal offers best practices and cost-efficient strategies.

December 1, 2009 (Des Moines, IA) - The market losses of 2008 caused many defined benefit pension plans to be significantly underfunded and created new challenges for employers who want to shut their plans down.

Many of those employers have already hard-frozen their defined benefit plans - meaning they aren't allowing new participants and benefits accruals have stopped for existing participants. The market downturn means they may now have to pump more money than expected into their plans before they can terminate them.

A new white paper authored by consulting actuaries from the Principal Financial Group®, Winding Down Your Hard Frozen Defined Benefit (DB) Plan, outlines best practices for developing and carrying out a strategy to close down a defined benefit plan in a timely, cost-efficient manner.

"Winding down a hard-frozen defined benefit plan requires a well-thought-out strategy in any environment but even more so in the aftermath of the market downturn," said Barry Young, consulting actuary at The Principal® and co-author of the white paper. "Our report defines best practices that can help financial professionals and their plan sponsor clients manage the potential risks and volatility that may emerge through the termination process."

The white paper offers tips on:

  • Understanding the rules for termination;
  • Developing a termination strategy by evaluating cost, funding strategies and the impact of asset allocation,including new dynamic strategies; and
  • Carrying out a termination strategy.

The white paper is part of a comprehensive program of resources, education and ongoing actuarial consulting from The Principal to help financial professionals and their clients with defined benefit plans understand and make decisions about their plans.

The white paper is available in the Retirement section of the Principal Research Center,

About the Principal Financial Group

The Principal Financial Group® (The Principal ®)[1] is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $280.4 billion in assets under management[2] and serves some 18.6 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit

Insurance products and plan administrative services are provided by Principal Life Insurance Company, a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

Copyright © 2009 Principal Financial Services, Inc. All rights reserved.


The Principal Financial Group and The Principal are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
As of September 30, 2009.

Call 515.246.4907 or see the full Media Relations contact list.

Call 515.246.4907 or see the full Media Relations contact list.

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